Complementarity between FDI and trade policies: Evidence from India

During liberalization episodes, oftentimes economies undergo a bunch of simultaneous reforms and changes in policies. Looking back at some of the most recent liberalization episodes such as Chile (1974), Brazil (1968-1973), China (1993-2005) and India (1991), two major reforms were consistently concurrent: tariff reductions and FDI openness. And although there…

Trade and Currency weapons compared

After decades of continuous progress towards global trade integration, the issue of protectionism has come back at the top of the policy agenda since the early 2010s. On the one hand, the large exchange rate movements recorded in the wake of the global financial crisis have raised concerns about looming…

Trade Margins, Price, and Product Quality Adjustments to Non-Tariff Measures: Evidence from French Firms

Globalization has increased interdependencies between countries and therefore the need for effective regulation. The enforcement of minimum quality standards such as sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs) allows governments to guarantee the absence of negative externalities. For instance, SPS measures have been adopted in response…

A European disease? Non-tradable inflation and real interest rate divergence

When the euro was introduced, conditions for economic convergence –the process of narrowing income gaps between lower and higher income countries– seemed to be present. Nominal interest rates between higher and lower income countries had converged rapidly and capital was flowing from the richer (the "core") to the poorer (the…

Sales and Markup Dispersion: Theory and Empirics

Models of monopolistic competition with heterogeneous firms have provided a fertile laboratory for studying a range of problems relating to the process of globalization. Much of this work to date has assumed special forms for preferences and technology, usually CES preferences on the demand side, and a Pareto distribution of…