Reshoring policies sacrifice the cost advantages of offshoring for economic security. Yet this trade-off may differ for intangible-intensive offshoring firms: their scalable intangibles lower marginal costs but entail fixed costs paid with foreign labor. How do reshoring policies affect these firms' location choices and Home consumption, output, and welfare? Using a two-country general equilibrium model with heterogeneous firms and endogenous entry, I compare lump-sum subsidies, tax credits, and tariffs. All three policies reduce offshoring and raise Home consumption and transitional welfare, but only subsidies increase output. The Ramsey-optimal mix combines a lump-sum subsidy worth 8.4% of offshoring profits with a 13.1% tariff, raising Home welfare by 4.0%. These gains come from correcting a distortion: offshoring firms and households ignore how their collective demand for foreign labor raises the foreign wage. Reshoring curbs this excess demand by moving production home and replacing high intangible fixed costs abroad with lower domestic ones, raising Home welfare.

This paper analyzes the impact of intangible capital on firms' offshoring decisions, aggregate productivity, and external competitiveness. I develop a two-country offshoring model with endogenous intangible investment that captures its unique scalability in a framework featuring heterogeneous firm entry and exit. The model successfully replicates the key post-GFC U.S. empirical regularities—the coexistence of aggregate productivity gains and real exchange rate appreciation. Following a positive productivity shock, the entry of domestic firms lowers average firm productivity and raises domestic prices, thereby amplifying the Harrod–Balassa–Samuelson effect. Furthermore, incorporating intangibles yields substantially larger aggregate productivity gains than non-intangible models by improving resource allocation. This research contributes by endogenously modeling the scalability of intangible capital—a crucial yet previously understudied factor in offshoring models.

We develop a dynamic, stochastic, general equilibrium model of war and macroeconomic dynamics. In our model, Home is at war with Foreign. The population of each country is split between the army and civilians. Each army has access to a stock of weapons. Civilians provide labor for production of new weapons or of goods. These can be consumed or invested to accumulate capital that will be used in future goods or weapons production. In each country, a planner allocates civilian and military resources with the goal of winning the war. This happens when one of the following outcomes materializes: The opponent's army or stock of weapons fall below certain thresholds, or consumption or civilian population in the opponent country fall below certain thresholds. We interpret the latter outcomes as situations in which a country loses the war because of loss of political support for it. The rest of the world can affect the outcome of the war by providing weapons aid to one of the countries or imposing sanctions on the other. Starting from a situation of lull in the war, we study the consequences of events that upset the balance and result in one or the other country winning the war. Possible events include changes in military efficiency (the ability of an army to inflict losses in an offensive or to defend against attack), changes in productivity in weapons or goods production, injections of reinforcements, and changes in the allocation of civilian labor to weapons versus goods production, goods output to consumption versus investment, and/or investment in capital for weapons or goods production. We study several possible scenarios taking these events as exogenous and then move on to the situation in which instruments of war and economy management are optimally determined by forward-looking planners.