This paper develops a stochastic equilibrium model of an open economy incorporating speculation in the forward exchange market. The model is used to examine two issues. The first is the role of speculation in stabilizing the economy against stochastic disturbances. Much risk averse speculation...

This paper analyzes exchange rate management in a simple overlapping generations model. This framework is used to evaluate alternative policies in terms of their implications for the welfare of individuals in the economy.The analysis identifies two objectives of monetary policy,providing...

Using transactions-level customs data from Colombia, we study firm-specific export patterns over the period 1996-2005. Our data allow us to track firms' entry and exit into and out of individual destination markets, as well as their revenues from selling there. We find that, in a typical year,...

We develop a theory of staggered adjustment dynamics in a perfect competition model of trade with a continuum of varieties. New technologies for each variety arrive at a constant rate. The consumer consumes a product produced with a certain technology until an exogenous shock arrives. This shock...