The geography of trade in goods and asset holdings

Gravity models have been widely used to describe bilateral trade in goods. Portes and Rey [Portes, R., Rey, H., 2005. The Determinants of Cross-Border Equity Flows. Journal of International Economics, 65(2), 269-296.] applied this framework to cross-border equity flows and found that distance, which proxies information asymmetries, is a surprisingly very large barrier to cross-border asset trade. We adopt a different point of view and explore the complementarity between bilateral trade in goods and bilateral asset holdings in a simultaneous gravity equations framework. Providing different instruments for both endogenous variables, we show that a 10% increase in bilateral trade raises bilateral asset holdings by 6% to 7%. The reverse causality is also significant, albeit smaller. Controlling for trade, the impact of distance on asset holdings is drastically reduced.     

The practice of collective bargaining in the private sector in Quebec (Canada): the changing ‘rules of the game’

Drawing on 45 semi‐structured interviews with union negotiators active in the Quebec private sector, this article shows that local bargaining practices, despite their plurality, have tended to change following major trends. It also reveals, more fundamentally, a redefinition of the ‘rules of the game’. The transformation and stability of these social rules, which are much more focused on the needs of employers, have tended to weaken collective bargaining as a tool for industrial democracy.     

Can government's choice of a high inflation policy be rational?

Out of the two inflation tax equilibria—i.e., the two inflation rates which bring the same revenue to the government—the higher one is not infrequently chosen. It is shown that such a choice may not be irrational for a government whose policy includes a financial repression and exchange rate controls and which is trying to maximize public sector expenditures. However, such policy is not sustainable in the long run, whatever its short-term advantages may be. Hence, policy makers should always weight advantages of higher public sector expenditures today against hardships of inevitable stabilization programs in the future.     

The Czech economic crisis: Policy revenge?

The current Czech economic crisis is defined and its causes are analyzed. The role of policies followed after the collapse of communism—especially the privatization strategy, macroeconomic stabilization (based on a balanced budget and a stable exchange rate regime), and the microsphere liberalization in the absence of a functioning legal environment—will be assessed in view of current economic difficulties. These policies are identified as the primary cause of these difficulties. The need for policy changes and the nature of such changes are elucidated.     

Quo Vadis, Europa

The Eurozone (and implicitly the whole EU) finds itself at the crossroad. Economic dynamism of the last few years revealed fissures in the European economic and increasingly political edifice. The vaunted achievement—the common currency Euro—proved itself to be the double-edged sword. The common currency certainly contributed to the increased integration both in the real and the financial sectors. However, in the presence of the persistent differences between the “northern core” and the countries on the Mediterranean littoral, this enhanced integration acts more as an undesirable weight and obstacle rather than the dreamed about engine of progress.