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We consider some of the important economic constraints faced by landlocked economies in a game theoretic framework that involves its neighbor that has access to the ocean. We identify the strengths that the landlocked economy might have or develop through policy in order to negotiate with its neighbor. The model is an infinitely repeated game between two asymmetric economies, with the threat of reversion to Nash equilibrium if an economy deviates from the cooperative agreement. We find that sustainable cooperative equilibriums that are Pareto superior do exist, drawing attention to the benefits of economic cooperation between neighbors even if they differ on geographical, political, or diplomatic issues. We do several robustness checks that further bring out the constraints and policy implications for the landlocked economies. JEL Classifications: F51, F53, F55, F59

We examine how different methods of reparations payments to African-Americans affect both the black and nonblack populations of the United States using the framework of the transfer-problem from international trade theory as a theoretical foundation. We find that reparations payments that provide incentives for blacks to use the payment toward purchases of goods and services produced by nonblacks might expand the income gap. Also a reparations payment in the absence of productive capacity owned by blacks is found to have no final positive impact on black income. These results indicate that a reparations payment strategy must be carefully and cautiously conceived in order to achieve the desired effects. Copyright � 2010 Blackwell Publishing Ltd.

The gravity model that serves as an important framework to explore the relation between exchange rate volatility and international trade suffers from two weaknesses: selection bias caused by dropping of observations with zero trade flows and the inability to predict asymmetric bilateral trade flows. The latter includes situations of bilateral trade in one direction but not in the opposite direction. While some recent literature has addressed the selection bias, there are no studies that address both problems in the context of the effect of exchange rate volatility on international trade. The article contributes to the literature by applying a recent model of firm selection to control for both biases. We found that the effect of exchange rate volatility on trade, that appears to be weak under the standard gravity model or in those models that only correct for sample selection bias, emerges as a strong negative effect as both biases get controlled.