We document that international transactions for narrowly defined goods occur infrequently. We study the implications of this lumpiness of international trade for the response of prices and quantities during large devaluations. Using a calibrated inventory management model of international trade...

A salient feature of the recent recession is that regions that have experienced the largest changes in household leverage have also experienced the largest declines in output and employment. We study a cash-in-advance economy in which home equity borrowing, alongside public money, is used to...

In the Great Contraction, regions of the United States that experienced the largest change in household debt to income ratios also experienced the largest drops in output and employment. Such output drops not only occurred for firms that sell primarily to a local region but also for regional...

using a novel plant-level dataset from Taiwan (1992-2004), that new product introductions are a key contributor to increases in plant-level factor productivity. We then formulate and calibrate a span-of-control model of product choice and firm dynamics in which new products embody the frontier...

The classic explanation for the persistence and volatility of real exchange rates is that they are the result of nominal shocks in an economy with sticky goods prices. A key implication of this explanation is that if goods in different sectors have different degrees of price stickiness then...

Using a micro-level dataset of all Korean manufacturing plants, we show that dispersion in the average product of capital are 1) volatile and persistent at the plant-level, 2) small at the industry-level (2- and 5-digit industries), and 3) systematically related to the size and age of a plant....

A pervasive prediction of business cycle models is that investment by firms in durable goods (capital, inventories) is highly sensitive to fluctuations in real interest rates (Thomas 2002, House 2007, Kryvtsov and Midrigan 2008). This prediction stands in sharp contrast with the data: investment...

We examine the general equilibrium implications of an Aguirregabiria (1999) - type economy, in which firms are subject to fixed cost of price- and inventory-adjustment that is capable of generating infrequent orders and price changes observed in the data. We ask whether the model can account for...

The large, persistent fluctuations in international trade that can not be explained in standard models by either changes in expenditures or relative prices are often attributed to trade wedges. We show that these trade wedges can reflect the decisions of importers to change their inventory...

The classic explanation for the persistence and volatility of real exchange rates is that they are the result of nominal shocks in an economy with sticky goods prices. A key implication of this explanation is that if goods in different sectors differing degrees of price stickiness then goods in...