Three essays in international trade and capital flows

The thesis embodies three chapters addressing three research questions in international trade and capital flows. The first chapter, titled "The Euro's effect on trade: An analysis of “old” and “new” EMU members provides new empirical evidence of the "euro effect" on bilateral trade flows by shedding light on the experience of “new” EMU members. The study covers the period 1988-2015. Our results show a positive but statistically insignificant euro's effect on bilateral trade. That notwithstanding, the “euro effect” is positive for the “new” EMU members. We also find an increase in the concentration of exports between “new” and “old” EMU members. In the second chapter titled "The impact of FDI on output growth volatility: A country-sector analysis", we analyse the relationship between FDI and output growth volatility by focusing on the manufacturing sector of OECD countries for the period 1990-2015. We find a positive and statistically significant relationship between inward FDI stock and sectoral output volatility. Our results also indicate that high capital-intensive sectors have larger volatility than low capital-intensive sectors. These results are robust to the use of different definitions of output volatility. Moreover, we find consistent results when we exploit information on FDI targeting practices. The third chapter, titled “Trade liberalisation and its impact on income distribution in Ghana”, uses a Computable General Equilibrium (CGE) model to study the impact of trade liberalisation on income of households using 2013 Social Accounting Matrix (SAM) for Ghana. We find that import tax reduction negatively affects the income and consumption of rural-farm households. We also find further losses in crop capital rent and demand for labour. We, instead, show that trade liberalisation benefits urban households in terms of growth in income and consumption.