This paper investigates the interlinkage in the business cycles of large-country economies in a free-trade equilibrium. We consider a two-country, two-good, two-factor general-equilibrium model with Cobb-Douglas technologies and linear preferences. We also assume decreasing returns in both...

The authors build a trade model that renders tractable the process in which imperfect competition in a country's downstream sector affects the rest of the world through international trade. For this purpose, internationally traded goods are viewed as middle products in the vertical chain of...

During the past half century, multilateral trade liberalization has reduced tariffs to historically low levels. The "Received Theory" of multilateral trade agreements, based solely on terms-of-trade externalities between national governments, offers an explanation that has become the...