Essays on international trade

Chapter 1 presents theoretical and empirical studies to explain the fluctuation of the real exchange rate (RER) in East Asia. Capital flows and technological change are primary interests. As an alternative measurement of the RER, residential housing rents and trade price indices are used as the prices of nontradable and tradable, respectively. The empirical study finds a significant effect of capital flows on the RER for most of the countries, with a few exceptions. The much lower variability of capital flows as an explanatory variable relative to the RER generates statistically insignificant results.; Chapter 2 presents alternative ways of supporting an intertemporal price stabilization policy within a general equilibrium framework. The study helps in the understanding of the fundamental mechanism of balance of payments crises as a failure of the pegged exchange rate. The government's capability of pegging is conditional on the means of finance because the government can stabilize the price by distortionary taxation under perfect information at the expense of a welfare loss, while the attempt of pegging by borrowing leads to a failure.; Chapter 3 presents the characteristics of equilibria when one industry operates under increasing returns to scale (IRS) and the other operates under constant returns to scale (CRS). For a small open economy, specialization in the CRS commodity is always a possible equilibrium while specialization in the IRS commodity and diversification are an equilibrium for limited prices. The model is extended to a two-country model. The stability of equilibria using the Marshallian dynamic adjustment process is discussed. The Marshallian process is not internally consistent when a country's exports are not a function of its imports.; Chapter 4 presents empirical evidence for a positive relationship between the intra-industry trade and trade volume for five Asian countries. This preliminary result is consistent with the division of labor hypothesis discussed by Adam Smith. Proposals are made for future research to build a general equilibrium model that supports this empirical study.