The small open economy in a generalized gravity model
发展了一个嵌套多种微观基础的引力模型，通过极限方法定义小型开放经济体，并推导其比较静态和最优政策，发现最优政策包括与外国需求弹性和供给弹性相等的出口税和进口关税，以及由规模弹性或加成率决定的就业补贴。
To provide sharp answers to basic questions in international trade, a standard approach is to focus on a small open economy (SOE). Whereas the classic tradition is to define a SOE as an economy that takes world prices as given, in the new trade literature it is defined instead as one that takes foreign-good prices and export demand schedules as given. We develop a gravity model that nests all its standard microfoundations and show how to take the limit so that an economy that becomes infinitesimally small behaves like a SOE. We then derive comparative statics and optimal policy for the SOE. Ignoring standard tax indeterminacies, optimal policy is characterized by export taxes and import tariffs equal to the (inverse) foreign demand and supply elasticities, respectively, and employment subsidies determined by the scale elasticity (under perfect competition) or markups (under monopolistic competition).