Essays in international economics

This dissertation contains three essays related to international economics and monetary economics. The first chapter studies the non-linear and non-monotonic relationship between trade liberalization and capital outflows from developing countries that is found in cross country data. It takes the perspectives of comparative advantage and heterogeneous firms, which predicts two competing effects of trade liberalization on capital outflows from developing countries. The second chapter presents an empirical study on countries' endogenous exchange rate regime choices by incorporating the spatial effects among trading partners. It develops a spatial ordered probit model with spatial effects and proposes a Bayesian estimation scheme accordingly. The estimation results are in sharp contrast with the existing literature that overlooks these spatial effects. The last chapter studies China's monetary policy. In particular, it constructs a DSGE model with regime switching to characterize China's use of both quantity rule and price rule in its monetary policy. The estimation results suggest that China's monetary policy still relies heavily on quantity rule, which is in fact more effective than price rule in stimulating output and tamping inflation.