Essays in international economics

This dissertation contains three essays that model private entities' cross border activities in the presence of contractual imperfections, and apply techniques in applied macroeconomics to verify the theoretical results derived. The first essay sets up a decentralized international borrowing arrangement to study the channel through which the absence of formal enforcement on a debt contract between citizens can slacken private sector's credit constraint in the international asset market. The second empirical paper completes the first essay via investigating, in a sample consisting of 73 developing and emerging market countries over the period 2004--2009, whether weaker domestic debt enforcement is associated with a larger amount of external debts owed by private sectors to outside creditors. The last essay turns to the field of vertical intrafirm trade, where I build an incomplete contract framework to show that the number of foreign affiliates (extensive margin) accounts for a greater share of the changes in aggregate intrafirm trade than the variation in the average exports per affiliate (intensive margin). This prediction is estimated using a 2007 cross-industry dataset on the number of affiliates as well as their shipments to parent multinational companies headquartered in the United States.