We develop and calibrate a model where differences in factor endowments lead countries to trade different goods, so that the existence of international trade changes the sectorial composition of output from one country to another. Gains from trade reflect in total factor productivity. We perform...

We develop a two-country, two-currency, search-theoretic model of monetary exchange, extending previous such models by endogenizing prices using bargaining theory. We analyze features of the environment that make it more likely that a given money circulates internationally. We show the value of...

The Doha Round differs from previous multilateral rounds since a number of participating countries are negotiating and implementing bilateral and regional free trade agreements (FTAs) at the same time as they are negotiating multilaterally. The standard arguments against FTAs involve that they...

Recently, the search-theoretic approach to monetary economics has been generalized to incorporate bilateral bargaining theory in order to determine the purchasing power of money endogenously (the first-generation of models in this literature essentially assume that prices are fixed exogenously)....

This goal of this paper is to extend existing search-theoretic models of fiat money, which until now have assumed that the price level is exogenous, by explicitly incorporating bilateral bargaining. This allows the determination of the price level endogenously and leads to additional insights...