This project aims to contribute to the literature on the determinants and the consequences of the organization of
production across national borders. Both the cross-national production within multinational firms and the
engagement in intermediate goods trade at arms length are in die scope ot this analysis.
The first project sets up a rigorous analysis of the implications of trade and investment treaties on trade and
investment creation and diversion and on welfare in a general equilibrium model setting. The derived hypotheses
will be tested empirically.
The second project sets up a dynamic framework of outsourcing in a model with imperfect labour rnarkets. The
hypotheses will be tested in a large panel of wages of EU industries.
The third project assesses the determinants of intermediate goods trade and looks at both the volume and the
composition of overall trade. The theoretical model will be a general equilibriurn model with two types of goods:
final and intermediate products. In a large sample of countries, one is also able to identify how trade liberalization
or GDP per capita convergence have contributed to the changing composition of trade (i.e., changing shares of
intermediate and final goods) and the reallocation of trade activity between the "rich" and the "poor" economies.
The last project formulates a spatial model of horizontal multinational activity, where firms may set-up a second
plant in the foreign economy. The equilibrium regime and location pattern will be driven by two key determinants:
country size and population density. The equilibrium location pattern and the associated welfare effects will be
rigorously analyzed.