Kalemli-Ozcan, Sebnem; Soylu, Can; Yıldırım, Muhammed Ali - National Bureau of Economic Research - 2025
We develop a novel framework to study the interaction between monetary policy and trade. Our New Keynesian open economy … model incorporates international production networks, sectoral heterogeneity in price rigidities, and trade distortions. We … decompose the general equilibrium response to trade shocks into distinct channels that account for demand shifts, policy effects …