combines the uncertainty shock idea of Bloom (2009) with a model of international trade, extending the idea to the open economy …. Firms import intermediate inputs from home or foreign suppliers, but with higher costs in the latter case. Due to fixed … costs of ordering firms hold an inventory of intermediates. We show that in response to an uncertainty shock firms optimally …

export their goods and whether to use imported intermediates. The model highlights mechanisms whereby import policies affect … counterfactual experiments to assess quantitatively the positive and normative effects of barriers to trade in import and export …. Furthermore, because of import and export complementarities, policies which inhibit the importation of foreign intermediates can …

, where exports are classified as ordinary trade, import-and-assembly processing trade (processing firm sources and pays for …