Trade Flow Dynamics with Heterogeneous Firms

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Trade Flow Dynamics with Heterogeneous Firms

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Title: Trade Flow Dynamics with Heterogeneous Firms
Author: Ghironi, Fabio; Melitz, Marc

Note: Order does not necessarily reflect citation order of authors.

Citation: Ghironi, Fabio, and Marc J. Melitz. 2007. Trade flow dynamics with heterogeneous firms. American Economic Review 97, no. 2: 356-361.
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Abstract: We use a two-country, stochastic, general equilibrium model of international trade and macroeconomic dynamics with monopolistic competition and heterogeneous firms to explore the role of entry in the domestic economy and the extensive margin of international trade in the dynamics of U.S. trade flows over the business cycle. We show that the model can reproduce the evidence on the cyclicality of U.S. trade and important features of the evidence on the extensive margins of domestic entry and international trade. Entry in the domestic economy and the implied differences in the timing of export and import expansions in response to favorable productivity shocks provide the key mechanism for the model's ability to explain this range of stylized facts.
Published Version: http://dx.doi.org/10.1257/aer.97.2.356
Other Sources: http://www.princeton.edu/~mmelitz/papers/GMTradeFlows07_0213NBERWP.pdf
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:3229097

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  • FAS Scholarly Articles [7362]
    Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University
 
 

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