This paper shows that the pricing behavior of exporting firms exhibits a “forward-looking” nature under sticky prices. It offers a channel by which the expectations of future exchange rates affect current prices. To seek the micro-level evidence, we adopt detailed product-level import data...

This paper presents theory and evidence on firms' import responses to exchange rate fluctuations using disaggregated Chinese imports data. The paper develops a heterogeneous-firm trade model that predicts import responses at both extensive and intensive margins as well as the more profound...

This paper presents theory and evidence on firms' import responses to exchange rate fluctuations using highly disaggregated data of Chinese imports from OECD countries. The paper first develops a heterogeneous-firm trade model and predicts firms' import responses at both the extensive and...

This paper presents theory and empirical evidence on that a forward-looking potential importer facing sunk costs will respond to expectation of future exchange rate fluctuations. This finding indicates the importance of sunk costs in firms' decisions to import goods. Building upon a...