We present a unified dynamic framework to study the interconnections between international trade and business cycle models. We prove an aggregate equivalence between a competitive, representative firm model that has aggregate production externalities and dynamic trade models that feature...

This paper aims at shedding some light on the interactions between international trade and firms' heterogeneity, by proposing a tractable model consistent with the stylised facts unveiled by the recent empirical literature. The model describes, in a general equilibrium framework, two economies...