Using the idea that firm-specific assets associated with marketing, management, and product-specific R & D can be used to service production plants in countries other than the country in which these inputs are employed, I develop a simple general equilibrium model of international trade in which the location of plants in a differentiated product industry is a decision variable. The model is then used to derive predictions of trade pattern, volumes of trade, the share of intra-industry trade, and the share of intrafirm trade as functions of relative country size and differences in relative factor endowments.

[Three exchange-rate regimes--a float, a one-sided peg, and a cooperative peg-are evaluated and compared in terms of efficiency and welfare levels. The framework of analysis embodies country-specific monies, with the money of each country being used to transact in its commodity markets and its currency-denominated bonds. Welfare levels depend only on consumption levels. In the presence of perfect foresight all equilibrium allocations are Pareto efficient. In a floating exchange-rate regime the perfect foresight equilibrium allocation coincides with an equilibrium of a costless barter economy. The same result holds in a one-sided peg if the pegging country's exchange-rate stabilizing authority breaks even over time. In a cooperative peg regime there is a different equilibrium allocation for each combination of exchange-rate levels and monetary policies. Problems of policy coordination and conflicts in desired monetary policies are discussed.]

Three exchange-rate regimes--a float, a one-sided peg, and a cooperative peg--are evaluated and compared in terms of efficiency and welfare levels. The framework of analysis embodies country-specific monies, with the money of each country being used to transact in its commodity markets and its currency-denominated bonds. Welfare levels depend only on consumption levels. In the presence of perfect foresight all equilibrium allocations are Pareto efficient. In a floating exchange-rate regime the perfect foresight equilibrium allocation coincides with an equilibrium of a costless barter economy. The same result holds in a one-sided peg if the pegging country's exchange-rate stabilizing authority breaks even over time. In a cooperative peg regime there is a different equilibrium allocation for each combination of exchange-rate levels and monetary policies. Problems of policy coordination and conflicts in desired monetary policies are discussed.

Budget deficits implying an unbounded present value of government debt are infeasible and, hence, induce expectations of a future policy change. The authors study how expectations of a policy switch, whose timing or mix between expenditure cuts, tax increases, or increases in money growth rates may be uncertain, affect economic dynamics before the switch takes place. They are especially concerned with the correlation between changes in the deficit and inflation. Of particular interest is their finding that timing uncertainty may induce fluctuations in the rate of inflation that seem to be unrelated to the budget deficit, at a time when the budget deficit is responsible for inflation. Copyright 1990 by The Review of Economic Studies Limited.

Stabilization programs in open economies typically consist of two stages. In the first stage the rate of currency devaluation is reduced, but the fiscal adjustment does not eliminate the fiscal deficit that causes growth of debt and loss of reserves, making a future policy change necessary. Only later, at a second stage, is this followed by either an abandonment of exchange rate management or by a sufficiently large cut in the fiscal deficit. We study how different second-stage policy changes affect economic dynamics during the first stage. These changes include tax increases, budget cuts on traded and nontraded goods, and increases in the growth rate of money.

Elhanan Helpman, Efraim Sadka; Consumption Versus Wage Taxation*, The Quarterly Journal of Economics, Volume 97, Issue 2, 1 May 1982, Pages 363–372, https://doi

l. INTRODUCTIO NEfficiency principles are no guide to optimal tax rates when income redistributio n is the purpose of that taxation.Optimal tax rates for redistributio n must be obtained through maximizatio n of a social welfare function constrained by technology and by what Pigou called the "announcem ent effects" of the tax."Announcem ent effects" refer to the alterations in the economic behavior of individuals induced by the tax scheme, which appear as constraints upon collective choice because they arise from individual utility-maxi mizing behavior that society cannot or will not inhibit.When redistribution is accomplishe d through lump sum transfers, announceme nt effects are assumed to be nil, and the problem of the distribution branch of government 1 -equating everyone's marginal social utility of incomeis transparent.Mirrlees 2 has attempted an analytic solution for the optimal income tax by maximizing a utilitarian social welfare function constrained to allow for the incentive effects of the tax upon work effort.Phelps 3 and Sheshinski 4 repeated this calculation for the Rawls social welfare function, and Fair 5 did a similar analysis for a social welfare function written as the product of individual utilities.This article develops a simulation technique for calculating the optimal income tax under any social welfare

[Exchange rate management is possible only if the government pursues consistent monetary and fiscal policies. We construct a model in which the real consequences of exchange rate management depend on the precise time pattern of these policies. We study the constraints on feasible policies and the comparative dynamics of disinflation by means of exchange rate targetting. Our theoretical results are consistent wit exchange rate-managed disinflation attempts in Argentina, Chile, and Israel.]

The authors study international trade between the North and the South where the industrial sector produces goods of different quality. The North exports high-quality products, the South low-quality products. Faster population growth in the South changes the spectrum of products exported by every country, and so does faster technical progress in the southern industrial sector. The latter leads also to the introduction of new high-quality products and the abandonment of old low-quality products. In all cases, there is a product cycle; the North abandons the production of its lowest-quality products which are subsequently produced in the South. Copyright 1987 by American Economic Association.

We develop a model of North-South trade in which the North exports high-quality and the South exports low-quality industrial products. Faster technical progress in the southern industrial sector leads the North to introduce new high-quality products and the South to abandon low-quality products. Production of northern low-quality products is shifted to the South. We also study the effects of technical progress in the North and population growth.