This thesis is an extension of recent research into the relationships between non-homothetic preferences and patterns of trade. The analysis focuses on the observed shift in consumption towards income-elastic services and, relative to agricultural goods, income-elastic manufactures associated with rising per capita incomes. In turn, the conjecture that we should witness a shift in global production and consequently a shift in trade away from primaries towards manufactured goods as the global economy develops is explored. This hypothesized change in the sectoral composition of global trade implies a change in individual country trade patterns. Specifically, the notion that a countrys exports must respond to a changing global market may help to clarify one of the principle causes of the shift towards manufacturing production among most small, trading economies.

This thesis is an extension of recent research into the relationships between non-homothetic preferences and patterns of trade. The analysis focuses on the observed shift in consumption towards income-elastic services and, relative to agricultural goods, income-elastic manufactures associated with rising per capita incomes. In turn, the conjecture that we should witness a shift in global production and consequently a shift in trade away from primaries towards manufactured goods as the global economy develops is explored. This hypothesized change in the sectoral composition of global trade implies a change in individual country trade patterns. Specifically, the notion that a countrys exports must respond to a changing global market may help to clarify one of the principle causes of the shift towards manufacturing production among most small, trading economies.

This paper tests the relationship between income inequality and trade flows. The model is based upon Helena Bohman and Désirée Nilsson (2007) and Mitra Trindade and Dalgin (2008). This paper will set up gravity model for 50 countries which includes, income distribution, population, average individual income level and GINI variable as distribution of disposable income as an explanatory variables. Results confirm that when income inequality increases in the exporting country, export of necessities increase and export of luxuries decrease. Income distribution also shows expected effect on trade flows in the importing country. When income inequality increases in the importing country, import of necessities decrease and import of luxuries increase.

Submitted by Tiago Carvalho Machado de Souza (tiagocmsouza@gmail.com) on 2017-09-11T00:06:25Z No. of bitstreams: 1 Tiago Souza - Dissertation.pdf: 996229 bytes, checksum: d66c6f04bc786ddb3ffcd12843e49226 (MD5) / Approved for entry into archive by ÁUREA CORRÊA DA FONSECA CORRÊA DA FONSECA (aurea.fonseca@fgv.br) on 2017-09-12T13:25:36Z (GMT) No. of bitstreams: 1 Tiago Souza - Dissertation.pdf: 996229 bytes, checksum: d66c6f04bc786ddb3ffcd12843e49226 (MD5) / Made available in DSpace on 2017-09-26T12:10:32Z (GMT). No. of bitstreams: 1 Tiago Souza - Dissertation.pdf: 996229 bytes, checksum: d66c6f04bc786ddb3ffcd12843e49226 (MD5) Previous issue date: 2016-12-16 / This dissertation is composed of two articles in applied economics. The first intends to develop a better understanding of how economies’ income distribution relates to pricing decisions of firms with market power. The goal is to identify variables that induce companies’ price changes looking to the demand side — instead of the more usual supply side explanations. It is an intuitive framework that allows bringing together otherwise con-flicting results of the empirical literature. The economy’s per-capita income, income share of buyers and companies’ market size (share of population that purchases their goods) are factors that determine their pricing behavior and help explaining patterns observed in reality. The second article is about countries’ decision to not repay their public debt. The focus, however, is on the relative scarcity of productive inputs that results from defaulting, and how easy it is to substitute among them. It is a different way of looking at the economic costs generated when governments miss to pay their debts. The environment built provides interesting results, as for example interest rate spreads that emerge by just changing inputs’ elasticity of substitution, without relying on differences in agents’ risk aversion. / Esta tese é composta por dois artigos em economia aplicada. O primeiro busca entender a maneira como a distribuição de renda de uma economia impacta a decisão de preços de firmas com poder de mercado. O objetivo é identificar, no lado da demanda, elementos que induzam mudanças na escolha de preços de empresas --- ao invés de explicações advindas do lado da oferta, mais usuais na literatura. É um arcabouço intuitivo e que permite conciliar resultados inicialmente conflitantes na literatura empírica que trata do mesmo assunto. A renda per-capita da economia, concetranção de renda dos compradores de um bem e o tamanho do mercado das empresas (fração da população que compra um bem) são fatores determinantes do preço e ajudam a explicar padrões observados no mundo real. O segundo artigo trata da decisão de default de países na gestão da sua dívida píblica. O foco, contudo, é na escassez de recursos produtivos em consequência do default e a facilidade com que se pode substituir esses insumos por outros. É uma proposta diferente de olhar para os custos economicos induzidos pelo não pagamento da dívida pública. O ambiente desenvolvido gera resultados interessantes, como spreads de juros apenas alterando a elasticidade de substituição dos insumos, sem recorrer a mudanças na aversão a risco dos agentes.