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Working Paper
Why do countries pursue bilateral trade agreements: a case study of North America
Current trade theory argues that countries pursue bilateral trade agreements to escape from a terms-of-trade driven prisoners' dilemma. This paper offers an empirical test of the theory. Using simulation results from a quantitative trade model of North America I show that the non-cooperative and cooperative payoffs implicit in the CFTA and NAFTA take on the two essential elements of a prisoners' dilemma. First, my results suggest that irrespective of county size unilateral liberalization makes the liberalizing country worse off, while making its regional trading partner better off. Next, I ...
Journal Article
Understanding U.S. regional cyclical comovement: How important are spillovers and common shocks?
This article develops a statistical model to study the business cycles of the eight U.S. Bureau of Economic Analysis regions. The author shows that the high level of cyclical comovement among per capita incomes of U.S. regions is the byproduct of common shocks to the regions rather than shocks that originate in one region and subsequently spill over to other regions.
Working Paper
North-South terms of trade: an empirical investigation
My empirical analysis a reveals a strong link between the terms of trade of industrial and developing countries. I show that the terms of trade developing countries are essentially the relative prices of commodity exports and manufactured imports. Similarly, I find that terms of trade fluctuations of industrial countries are heavily influenced by movements in the relative price of manufactured exports and commodity imports. This means that improvements in the terms of trade of developing countries imply a worsening in the terms of trade of developing industrial countries, and vice versa. One ...
Journal Article
Are U.S. and Seventh District business cycles alike?
This article explains the recent high levels of residential investment and rates of homeownership.
Journal Article
A dynamic macroeconomic analysis of NAFTA
This article studies the impact of NAFTA on the three North American economies and a composite of their trading partners. The results suggest NAFTA will lead to welfare gains for all North American participants, with the greatest gains accruing to Mexico.
Journal Article
Evidence of the North--South business cycle
This article examines the fluctuations of two regional economies: the developed, industrial goods exporting countries of the world ("North") and the developing, commodity exporting countries ("South"). The author finds that these very different regions have similar business cycle characteristics and that cyclical fluctuations in one region are positively correlated with fluctuations in other. Preliminary data analysis suggests that cyclical fluctuations in the South are caused by fluctuations that originate in the North.
Newsletter
Is the U.S. current account sustainable?
This article clearly defines what economists mean by a sustainable current account. The author provides an estimate of the sustainable current account balance for the U.S. economy and assesses the implications of this estimate for the existing current account and level of foreign indebtedness.
Working Paper
Dynamic trade liberalization analysis: steady state, transitional and inter-industry effects
Despite their complexity, existing policy evaluation methods ignore many features of the real world that are pertinent for welfare analysis of trade policy. The main limitation of these technics is that they are static, which means they ignore important dynamic consequences of trade liberalization. This paper develops dynamic tools that overcome many of these weaknesses. I apply these technics to the North American Free Trade Agreement (NAFTA). My analysis suggests that while the steady state gains from NAFTA are significant, the transitional costs associated with moving to the liberalized ...
Working Paper
Is there evidence of the new economy in the data?
The popular new economy theory argues that the U.S. economy can now grow at rates much greater than in the past without igniting higher levels of price inflation. At the core of the new economy paradigm is the belief that the U.S. Economy experienced an innovation in the 1990s that raised its so-called constant-inflation trend growth rate. According to its advocates, evidence of the new economy comes from the fact that the U.S. economy experienced relatively strong output growth and low levels of price inflation over the 1990s. This paper evaluates the new economy theory by formally testing ...