The debate between the North and the South about the enforcement of intellectual property rights is examined within a dynamic general equilibrium framework in which the North invents new products and the South imitates them. A welfare evaluation of a policy of tighter intellectual property rights is provided by decomposing its response into four items: (1) terms of trade; (2) production composition; (3) available products; and (4) intertemporal allocation of consumption The paper proceeds in stages. It begins with an exogenous rate of innovation in order to focus on the first two elements. The following two components are added by endogenizing the rate of innovation. Finally, foreign direct investment is added to the model. Copyright 1993 by The Econometric Society.

The Helpman-Razin model of international trade under uncertainty is extended to allow for country-specific productivi ty shocks. It is shown that, for the multiple-sector multiple-factor case, there exists a set of interesting sufficient conditions under w hich it is possible to predict the pattern of international trade in securities, goods, and factor content on the basis of cross-country d ifferences in factor endowments. It is shown that, under these circum stances, some well-known empirical tests have to be modified. Copyright 1988 by The Econometric Society.

MANY PROBLEMS IN MACROECONOMICS, both of closed and open economies, are analyzed by means of expenditure and money demand functions. The properties of these functions play a major role in the derivation of results in these investigations. Although specifiers of such functions have in mind optimizing behavior by economic agents, explicit derivation of their properties from optimizing behavior is seldom undertaken. In many cases in which they are undertaken, it is assumed that utility depends on real money balance (e.g. [2]), an assumption which many find undesirable. There have been recently attempts to deal with macroeconomic issues by explicitly modeling the role of money in the economy thus avoiding the need to model it as an argument of the utility function-and by explicitly using optimizing behavior of economic agents (e.g. [3,5,6]). However, in those cases either the expenditure and money demand functions were characterized for steady states (e.g. [5,6]), or they were not derived because they were not required [3]. In this paper I derive an expenditure and a money demand function which arise from a problem of optimal allocation of consumption over time in which all payments are made in the form of money, there are liquidity constraints, and money is the only asset. Utility is derived only from consumption. These functions can be used to investigate macroeconomic problems as demonstrated

[Defining each good (factor) in each different country as a distinct good (factor), one can use Scarf's algorithm to solve general equilibrium problems for a trading world. The dimension of such problems grows very fast with the number of goods (factors) and countries, making computations extremely costly. Here we present a method for solving general equilibrium problems for a trading world which can be applied to a class of problems, and which requires considerably less computation time than the direct application of Scarf's algorithm.]

We introduce firm and worker heterogeneity into a model of innovation†driven endogenous growth. Individuals who differ in ability sort into either a research activity or a manufacturing sector. Research projects generate new varieties of a differentiated product. Projects differ in quality and the resulting technologies differ in productivity. In both sectors, there is a complementarity between firm quality and worker ability. We study the co†determination of growth and income inequality in both the closed and open economy, as well as the spillover effects of policy in one country to outcomes in others.

This paper develops a new framework for examining the determinants of wage distributions that emphasizes within-industry reallocation, labor market frictions, and differences in workforce composition across firms. More productive firms pay higher wages and exporting increases the wage paid by a firm with a given productivity. The opening of trade enhances wage inequality and can either raise or reduce unemployment. While wage inequality is higher in a trade equilibrium than in autarky, gradual trade liberalization first increases and later decreases inequality.