We consider optimal trade policy for a large country with private information. We show that the optimal tariff leads to a signaling equilibrium with higher tariffs and lower welfare than under complete information, whereas the optimal import quota replicates the complete information equilibrium...

The authors use a standard general-equilibrium trade model to show that export and import policies are not symmetric in the equilibrium of a strategic game with quotas. It is assumed that <i>N</i> (identical) large countries, without cooperation, set their import (or export) quotas to maximize domestic...

The paper develops the theory of generalized purchasing-power parity (G-PPP) to explain the "stylized facts" of real exchange-rate behavior. The fundamental economic variables determining real exchange rates are nonstationary; thus real rates are nonstationary. If the fundamentals are...