[Several recent empirical studies of trade suggest that interindustry specialization and trade, which reflect the conventional forces of comparative advantage, are also accompanied by intraindustry specialization, which reflects scale economies and consumers' taste for a diversity of products. This paper develops a simple model which illustrates this argument. Two main results are developed. First, the nature of trade depends on how similar countries are in their factor endowments. As countries become more similar, the trade between them will increasingly become intraindustry in character. Second, the effects of opening trade depend on its type. If intraindustry trade is sufficiently dominant, the advantages of extending the market will outweigh the distributional effects, and the owners of scarce as well as of abundant factors will be better off.]

Endogeneous-growth theory suggests that technological change tends to reinforce the position of the leading nations. Yet sometimes this leadership role shifts. We suggest a mechanism that explains this pattern of "leapfrogging" as a response to occasional major changes in technology. When such a change occurs, the new technology does not initially seem to be an improvement for leading nations, given their extensive experience with older technologies. Lagging nations have less experience; the new technique allows them to use their lower wages to enter the market. If the new technique proves more productive than the old, leapfrogging of leadership occurs.

This paper develops a simple general equilibrium model of a monetary economy with a capital market. Money demand arises from a “cash-in-advance” constraint rather than from any direct role in the utility function, and uncertainty gives rise to a meaningful portfolio choice between money and bonds. We show that velocity is increasing in the rate of inflation, and that the optimal monetary policy is that which maximizes real balances. We also show that the real rate of interest is not invariant to monetary, policy: inflation lowers the real rate.