In an intertemporal general equilibrium framework, we compare a Cournot equilibrium to the Walras equilibrium. The Cournot agents trade and invest less than the Walras agents. This generates an ineffciency which does not vanish as the number of Cournot agents tends to infinity. A larger number...

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to...

Under what conditions should grants be preferred to loans? To answer this question, we present a simple model à la Krugman (1988) and show that, for any given level of development assistance, higher concessionality is good for growth if countries are poor, have bad policies, and have high debt...

The recent wave of financial crises has fueled the debate on the effect of IFIs intervention on governments' incentives to undertake reforms. In this paper we treat this intervention more generally as a country insurance contract, and examine its implications in a stylized set-up. More...

Strategic trade policy affects foreign-based firm's internationalization mode. In this paper, by endogenizing market structure and tariff policy, we claim that 'tariff jumping' is not enough to give a rationale to the existence of multinational enterprises, in absence of cost differentials and...

It is a well known result that through national lump sum taxes and transfers everybody can gain from international trade. This is always the case when domestic lump sum tax and transfers are implemented before trade. This brief note points out that if domestic transfers are possible only after...

In this paper, we adopt the vertical differentiation duopoly framework to give a full description of firms’ relocation decisions, when the removal either of trade barriers or of restrictions on capital outflows/inflows (‘globalization’) allows them to serve the domestic market through...

We analyze the impact of a minimum price variation (tick) and time priority on the dynamics of quotes and the trading costs when competition for the order flow is dynamic. We find that convergence to competitive outcomes can take time and that the speed of convergence is influenced by the tick...

In this paper, we examine how country insurance schemes affect policymakers' incentives to undertake reforms. Such schemes (especially when made contingent on negative external shocks) are more likely to foster than to delay reform in crisis-prone volatile economies. The consequences of country...

This paper uses a vertical differentiation duopoly framework to analyze firms’ relocation decisions, when the removal of trade barriers or restrictions on capital outflows or inflows (“globalization”) allows them to serve the domestic market through foreign plants in low-wage countries....