Three essays in international economics

The first essay, entitled "Multilateral or Bilateral Trade Agreements: Explaining the Shift in the Position of the United States", provides a new explanation for the change of heart of the U.S. government in the 1980's towards its participation in bilateral and regional trade agreements. In the context of a model of bargaining over tariff reductions, the paper shows that a multilateral trade agreement does not always yield a higher welfare for all participating countries relative to what they could have achieved through a series of bilateral trade agreements. In particular, a country experiencing a trade deficit can prefer the bilateral framework. The change of position of the U.S. in the early 1980's could then be explained by its shift to a negative trade balance over roughly the same period.;The second essay, entitled "Technical Trading Profitability in Foreign Exchange Futures Markets and Federal Reserve Intervention", is an empirical study of the correlation between Federal Reserve intervention in spot currency markets and the performance of a technical trading rule in futures markets. A simple moving average trading rule is tested in the Yen and Mark futures markets for the years 1979-1992 and is found to yield significant profits. It is shown, however, that the performance of the rule can be traced almost exclusively to periods of Federal Reserve intervention, and that the majority of the profits arise when the trading rule bets against the Fed.;The third essay, "Foreign Exchange Trading Volume and Federal Reserve Intervention", looks at the link between intervention by the Fed in the Mark spot market and movements in currency trading volumes. The first section surveys the different measures of foreign exchange trading volume which have been used in recent research. Precise trading volumes are only available for futures markets, and problems with their use are discussed in the second section. The third section shows that intervention by the Fed is correlated with an increase in futures trading volume. That increase may be related to public announcements of Fed interventions, as "secret" interventions appear, by contrast, to be correlated with a slight decrease in volume.