Essays on International Economics

Abstract
The first chapter in this dissertation investigates the effect of oil booms on public saving. By proposing an intertemporal two-period model, where the government finances its expenditure using taxes and oil revenues, I find that an oil boom has a negative effect on the optimal tax rate and an ambiguous effect on current account. On one hand, the “windfall effect” results from a higher level of public saving via oil revenue. On the other hand, the “voracity effect” arises from a larger number of powerful political groups in the economy trying to capture the gains from the boom, which increases public expenditure and deteriorates the current account. I support the theory using international annual data with particular emphasis on OPEC and Non-OPEC in the period 2005-2012. Evidence from data suggests that: (i) oil booms have a positive impact on government spending and current account but a negative impact on tax revenue in both group of countries, and (ii) these effects are stronger in the OPEC, where political cohesion is very high.
The second chapter investigates the relationship between counterfeit software production, government corruption and GDP across countries. By proposing a static general equilibrium model where two software producers and one software consumer interact, I find that output has a negative effect on the equilibrium level of counterfeit software and this effect is attenuated by government corruption. I support the theory with international annual data for 107 countries in the period 2007-2013. By controlling for trade openness and intellectual property rights, the evidence suggests that GDP per capita has a negative impact on the counterfeit software fraction which is reduced in the most corrupt countries.
The last chapter provides a rigorous analysis of pollution emitted by Mexican manufacturing exports for pre- and post-NAFTA periods using the Environmental Kuznets Curve (EKC), an economic concept that predicts a non-monotonic income-pollution relation. I identify weak empirical support for the “pollution haven” hypothesis given the increase in the Mexican’s government bargaining power –relative to Mexican powerful private elites- after NAFTA. Since 1994, Mexican government triggered a process of political liberalization and fight against corruption, where the rise of several political parties improved their ability to impose stringent pollution taxes and tight environmental regulation.