This paper develops a dynamic general equilibrium model that tries to reconcile the observation that aggregate movements of exports and imports are "disconnected" from real exchange rate movements, while firm-level exports co-move significantly with the real exchange rate. Firms are...

This paper develops a dynamic general equilibrium model that attempts to reconcile the observation that aggregate movements of exports and imports are disconnected from real exchange rate movements, while firm-level exports co-move significantly with the real exchange rate. Firms are...

The Lerner paradox is the possibility that a tariff on an import good might worsen a country's terms of trade, and the Metzler paradox is the possibility that a tariff on an import good might reduce a country’s import price. In a general equilibrium framework with multiple goods, this paper...