This paper investigates the relationship between trade openness and the size of governments, both theoretically and empirically. We argue that openness can increase the size of governments through two channels: (1) a terms of trade externality, whereby trade lowers the domestic cost of taxation,...

We study the effects of trade integration on the regional coevolution of income, migrations and unemployment in a dynamic coreperiphery model with limited labor mobility and frictions in the job matching process. Our model can help explain a recently documented empirical puzzle, i.e., the...