Optimal Tariff Theory: When a Tariff Can Make a Large Country Better Off
Optimal tariff theory is the exception to the free-trade rule. A large country can raise its welfare by taxing imports,...
International Trade and Economics
Explore the world of international trade and economics with our expert articles
Trade in Tasks: The Grossman-Rossi-Hansberg Model of Offshoring
Trade in tasks reframes globalization. The Grossman-Rossi-Hansberg model shows why countries no longer trade finished goods but the tasks that...
Melitz Heterogeneous Firms Model: How Trade Reshapes Industries from the Inside
The Melitz heterogeneous firms model explains why only the most productive firms export and why trade reshapes industries by reallocating...
Balassa-Samuelson Effect: Why Rich Countries Have Higher Prices
The Balassa-Samuelson effect explains why prices are systematically higher in rich countries by linking tradable productivity gains to economy-wide wage...
Dornbusch Overshooting Model: Why Exchange Rates Overshoot
The dornbusch overshooting model proves that sticky goods prices and flexible financial markets force exchange rates to depreciate beyond long-run...
J-Curve Effect: Why Devaluation Hurts Before It Helps
The j-curve effect explains why currency depreciation worsens the trade balance before improving it, as valuation effects dominate in the...
Marshall-Lerner Condition: When Devaluation Improves Trade Balance
The Marshall-Lerner condition states that a currency depreciation improves the trade balance if the sum of export and import demand...
New Trade Theory Krugman: Why Big Markets Win
New Trade Theory Krugman explains why similar countries trade similar goods, how economies of scale and love of variety drive...
Nordic Model Economics: High Taxes, Growth, and Equality Explained
Nordic model economics explained: how Denmark, Sweden, Norway, and Finland combine high taxes and generous welfare states with competitive economies,...
Digital Trade: How Cross‑Border Data Flows Reshape Global Commerce
Global digital trade reached $7.23 trillion in 2024 and is growing at twice the pace of traditional commerce, but the...