© 2006

International Trade and Multinational Activity

Heterogeneity of Firms, Incentives for Foreign Direct Investment, and International Business Cycle Dynamics


Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 573)

Table of contents

  1. Front Matter
    Pages I-X
  2. Pages 1-3
  3. Pages 137-140
  4. Pages 141-155
  5. Back Matter
    Pages 157-162

About this book


During the last 25 year, the neoclassical Heckscher-Ohlin trade theory has been extended to the ‘new’ trade theory by including imperfect competition and fixed costs into the analysis of trade relations. Furthermore, these micro-oriented trade models are increasingly used to analyze macro-oriented questions. Chapter 2 of this study investigates the dynamic welfare effects of exposure to trade in a new trade model, which is extended by firm heterogeneity. It is analyzed under which conditions exposure to trade with firm heterogeneity increases or decreases steady state welfare of a country. Chapter 3 uses a new trade model to explore which country-specific conditions give rise to horizontal or vertical multinational activity. Finally, chapter 4 combines the Heckscher-Ohlin model and a new trade model with horizontal multinational firms with the macro-oriented real business cycle model and analyzes the role of goods trade and horizontal multinational firms in international business cycle transmission.


Firm Heterogeneity Foreign Direct Investments International Business International Business Cycles Trade theory

Authors and affiliations

  1. 1.Department of EconomicsUniversity of Duisburg-EssenEssenGermany

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