We study the implications of trade aggregation in an infinite-horizon economy with multiple countries. Specifically, we ask whether there is a role for alternatives to the Armington aggregator in the workhorse open-economy macroeconomics model. We show analytically that the first-order dynamics...

We study the implications of trade aggregation in an infinite-horizon economy with multiple countries, asking whether there is a role for alternatives to the Armington aggregator in a wide range of workhorse open-economy macroeconomics models. We show analytically that the first-order dynamics...