We argue, in a model with trade and unemployment, that exogenous inflow of foreign capital may deliver the desired result when it flows to a protected intermediate-goods sector. Whether foreign investment should be directed towards an intermediate-goods sector or to a final-goods sector depends...

In this paper we study the impact of more transparency in the foreign exchange market on the <i>ex ante</i> expected volume of international trade. Transparency is measured by the informational content of publicly observable signals. These signals convey information about the use of policy instruments...

For currencies with highly developed forward markets a well-known separation theorem holds which implies that international firms fully hedge the exchange rate risk if the forward markets are unbiased. In this paper we present a model of a risk-averse firm when perfect hedging instruments are...

The purpose of this paper is to incorporate the currently mushrooming phenomenon of outsourcing into the standard two-sector, two-factor Heckscher-Ohlin model of international trade. We first show how outsourcing modifies a firm's production function, and then demonstrate that outsourcing...

This paper analyzes the consequences of international factor movements on the skilled-unskilled wage inequality in a dual-economy set-up that includes unemployment and three intersectorally mobile factors of production-unskilled labor, skilled labor, and capital. Thus far, theoretical literature...