Alessandria, George; Choi, Horag; Ruhl, Kim - National Bureau of Economic Research (NBER) - 2014
We build a micro-founded two-country dynamic general equilibrium model in which trade responds more to a cut in tariffs in the long run than in the short run. The model introduces a time element to the fixed-variable cost trade-off in a heterogeneous producer trade model. Thus, the dynamics of...