This is a theoretical and empirical study of trade policy in a small open economy with intermediate inputs. The first part develops a theoretical model and obtains expressions for optimal second-best tariffs on an intermediate input. In the second part, we estimate, for Pakistan, the optimal...

We construct a two-good general equilibrium model of international trade for two small open economies where pollution from production is transmitted across borders. Governments in both countries impose emission taxes non-cooperatively. Within this framework, we examine the effect of trade...

The literature on indirect tax reforms in pollution-ridden economies is quite limited. This paper, using a model of a small open economy with production and consumption generated pollution, considers the welfare implications of tax reforms within an integrated structure of consumption and...

We develop a theoretical model of foreign aid to analyse a method of disbursement of aid which induces the recipient government to follow a more pro-poor policy than it otherwise would do. In our two-period model, aid is given in the second period and the volume of it depends on the level of...

We examine the interaction between foreign aid and binding borrowing constraint for a recipient country. We also analyze how these two instruments affect economic growth via non-linear relationships. First of all, we develop a two-country, two-period trade-theoretic model to develop testable...

We analyse strategic environmental standards in the presence of foreign direct investment (FDI). A foreign firm located in a host country competes with a domestic firm in another country to export a homogeneous good to a third country. We also extend the model to allow the number of FDI to be...