Recent empirical work identi.es two main channels through which consumers benefit from trade. Trade liberalization lowers prices, while it raises product variety. This paper develops the first model that connects both channels and interprets their interaction. It shows that heterogeneity in firm...

The reallocation of output across plants and the productivity growth at individual plants are both important sources of productivity growth at the industry level. Recent evidence has shown that trade liberalization is related to both e..ects. While a trade model with firm heterogeneity can...

This paper contributes to the literature on both embodied technical progress and firm dynamics, by formulating an endogenous growth model where selection and imitation play a fundamental role in helping capital good producers to learn about the productivity of technologies embodied in new...

Recent years have seen a surge in websites that provide news for free and, up to the end of 2001, daily newspapers in Italy have shown a growing trend towards making available online for free; the exact articles published on paper. To assess whether on-line news and traditional daily newspapers...

The aim of this paper is to understand whether international trade may enhance innovation and growth through an increase in competition. We develop a two-country endogenous growth model, both countries producing the same set of goods, with firm specific R&D and a continuum of oligopolistic...

A small system of German economic variables consisting of the money stock M3, Gross National Product (GNP) and a bond rate is used to illustrate the power of cointegration analysis and the usefulness of some recently developed tools for this kind of analysis. Testing for the cointegrating rank...

The effects of competition on growth are analyzed in the recent literature by comparing economies with the same market structure but different degrees of substitutability. In this note, we show that in a general equilibrium model with monopolistic competition à la Dixit-Stiglitz the effect of...

A simple dynamic general equilibrium model is set up in which firms face idiosyncratic productivity shocks. Firms whose productivity has fallen too low exit, and entrants try to imitate the best practice of existing firms, so that the expected productivity of entering firms is a function of...

This paper analyses the impact of trade liberalization in a model where heterogeneous firms can freely offshore their production. Firms choose whether to produce, and if so whether to sell on the domestic market only or on the export market as well. Simultaneously, they also choose where to...

Standard theoretical models would predict that a currency depreciation generates an increase in net exports. However, recent emerging market crises, accompanied by sharp exchange rate devaluations, have often been followed by a fall in or a stagnation of exports. This paper provides a simple...