combines the uncertainty shock idea of Bloom (2009) with a model of international trade, extending the idea to the open economy …. Firms import intermediate inputs from home or foreign suppliers, but with higher costs in the latter case. Due to fixed … costs of ordering firms hold an inventory of intermediates. We show that in response to an uncertainty shock firms optimally …

combines the uncertainty shock idea of Bloom (2009) with a model of trade, extending the idea to the open economy. Firms import … hold an inventory of intermediates. In response to an uncertainty shock firms optimally adjust their inventory by cutting … international trade flows than in domestic activity. We confront the model with newly-compiled U.S. import data and industrial …