Since the seminal work of Krugman, product variety has played a central role in models of trade and growth. In spite of the general use of love-of-variety models, there has been no systematic study of how the import of new varieties has contributed to national welfare gains in the United States....

A striking feature of many financial crises is the collapse of exports relative to output. This article examines whether deteriorations in bank health can help explain the large drops in exports relative to output. Our article is the first to establish a causal link between the health of banks...