Three Essays Exploring the Interactions Between Domestic and Foreign Economic Factor

Recently, under the umbrella of industrial policy and economic diplomacy, debates concerning the interactions between global and local economies, and between economic partners, have intensified. Contributing to this discussion, this thesis investigates the dynamics of the interactions between domestic and foreign economic factors. In the first chapter, we study the effect of the terms of trade on consumption. In the second chapter, we study the effect the bilateral exchange rate regime has on bilateral FDI flows. In the third chapter, we investigate whether trade causes institutional convergence by studying the effect that bilateral trade has on bilateral institutional distance.