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In this work, I conceptualize innovation as a core institution of the world economy and society, and study the factors involved in its expansion across the globe. Specifically, I examine local conditions and global institutional pressures affecting a country's willingness to take part in the innovation economy, its level of expenditure on innovation, and the actual product of those expenditures. I use event-history models and panel regressions to test the aforementioned relationships on a sample of 132 countries from 1996 to 2012. There are four main findings. First, developing nations that are close to the advanced countries (in the core of the global political economy) are likely to follow the norms of the core and initiate actions to be considered as participants of the innovation economy. Second, countries are likely to mimic neighbors in their innovation spending patterns. Third, most developing regions of the world show signs of decoupling (producing significantly less innovation patents at the same level of R&D spending than the core). And, fourth, local competition is associated to mimetic isomorphism regarding innovation but also to lower levels of decoupling in the production of patents (by increasing the efficiency of R&D investments). These results suggest that there is imitation of the global core and of neighbors (oftentimes) despite sub-standard levels of efficiency, and that participating in innovation is as important as producing actual innovation.

This dissertation studies dynamic models in the context of international economics and the U.S. economy. First, the focus is on the effect of commodity shocks in an small open economy in a dynamic trade model. Then, this dissertation studies the effects of monetary policy in a dynamic trade model. Finally, dynamics between government debt and bubbles are studied considering an overlapping generation model.

This dissertation studies dynamic models in the context of international economics and the U.S. economy. First, the focus is on the effect of commodity shocks in an small open economy in a dynamic trade model. Then, this dissertation studies the effects of monetary policy in a dynamic trade model. Finally, dynamics between government debt and bubbles are studied considering an overlapping generation model.The first chapter, "Dutch Disease in a Dynamic International Trade Model of an Small Open Economy", models a dynamic small open economy which produces and trades final goods and a commodity. The commodity is modeled as an homogeneous good and it is demanded by the rest of the world. The dynamic system developed in this chapter relies on key parameters that characterize the small open economy. These parameters are the elasticity of substitution across final goods and the shape parameter of the Pareto distribution of productivities. In order to compute the steady-state of the economy and study the dynamics implied by the model, we estimate both the elasticity of substitution and the shape parameter of the Pareto distribution considering data for the Chilean economy, which satisfies the small open economy assumption as well as the commodity production.The second chapter, "Monetary policy in a dynamic trade model with heterogeneous firms", studies the effect of monetary policy on a dynamic model of trade with heterogeneous firms. We study the dynamic implications of monetary policies that act during "normal times" and monetary policies that leave the economy at the zero lower bound. In order to do so, we craft a model which incorporates nominal rigidities. This feature generates a friction such that nominal shocks affect real allocations in the economy. To build the model, we combine nominal frictions with firm heterogeneity as in Melitz (2003) in a dynamic setting as in Ghironi and Melitz (2005).The final chapter, "A Note on Government Debt and Bubbles", studies the interactions between government debt and bubbles in an economy. We consider a general equilibrium approach in a productive economy and we explore conditions under which government debt path in our model is consistent with the government debt path observed in the last twenty years. During that period, government debt, as share of GDP, has interacted with bubbles in a countercyclical pattern. That is, in the absence of bubbles there is an increase in the evolution of debt-to-GDP ratio, and when a bubble is traded, debt-to-GDP ratio is decreasing.