Economic Logic

US manufacturing is on the decline, and the obvious reason is pressure from globalization. This is not necessarily bad as it means a better ...

Why did the Great Recession spread outside the United States? In particular, why did almost all Western industrial countries enter a deep an...

China has been heavily criticized by western politicians and policy-makers for its exchange rate policy that favors its export industry. Som...

The introduction of containers has dramatically simplified international trade but has been resisted in some ports with even more dramatic c...

The border effect describes a striking feature of the data on trade volumes. Volumes typically decrease with distance traveled, with a jump ...

The US has complained for decades that Japan is making it difficult for American companies to export cars there. The complaints were about r...

Theory tells us the law of one price should hold: the same good should have the same price throughout the world after taking into account ex...

In international trade, how is the currency of invoicing determined? This is a big deal as it determines how is carrying the exchange rate r...

The World Trade Organization exists to foster free trade and to resolve disputes about unfair trade practices. It is thus an organization th...

The theory of optimal currency areas initiated by Robert Mundell states that a monetary union should be beneficial between regions that have...

When a good is exported and exchange rates fluctuate, how much of the exchange rate change is reflected in local pricing? Establishing the e...

If you have traveled across Europe before the introduction of the Euro, you have certainly been annoyed by the frequent changing of currenci...

The literature on international environmental agreements has established that when such agreement are only of the self-enforcing kind (not i...

Multinational companies are the scorn of the anti-globalization movement, and some of it is well deserved. Often, their size allows them to ...

It is notoriously difficult to understand exchange rate fluctuations, especially in the shorter term. Predicting them is even worse, to the ...

There is a natural tendency for firms to borrow too much. This is known as the debt dilution problem. It occurs because the borrower does no...

It is quite obvious that the gains from trade are positive, but implementing a free trade agreement obviously also implies some losses, in p...

25 years ago, it was very rare to see a car with Eastern European plates in Western Europe. Now, they are all over the place, including truc...

China is currently amassing large foreign reserves while imposing internally capital controls. Does this make sense? Wouldn't an economy...

I have described here some of the outlandish forays of physicists into Economics, where they try to use concepts from their discipline with ...