Large movements in the exchange rate are quite common, and they substantially alter one's purchasing power when traveling abroad. Yet these exchange rate movements tend to have a smaller impact on the price of foreign goods that are imported. Following an appreciation of the euro against the...

Although the amount of U.S. imports and exports has varied greatly over time, in recent years, the U.S. has been running trade deficits. Some people react to such trade deficits with doom and gloom; others cite them as evidence that foreign governments are not playing fair in U.S. markets; still...

This paper studies export dynamics in emerging markets following large devaluations. We document two main features of exports that are puzzling for standard trade models. First, given the change in relative prices, exports tend to grow gradually following a devaluation. Second, high interest...

The large, persistent fluctuations in international trade that can not be explained in standard models by either changes in expenditures or relative prices are often attributed to trade wedges. We show that these trade wedges can reflect the decisions of importers to change their inventory...

This paper studies the role of international trade and the export participation decisions of establishments for the entry of establishments over the business cycle in a general equilibrium model. The model captures two key features of establishment and exporter dynamics: i) new establishments...

We study the growth in the share of US manufactured output exported from 1987 to 2002 through the lens of the Melitz (2003) model, a monopolistically competitive model with heterogenous producers and fixed costs of exporting. Using the model, we infer that iceberg costs fell from approximately...

recession.

We study the role of inventories for the volatility of international trade and the propagation of business cycles. We build a model of international trade in which intermediaries have a precautionary motive to hold inventories. With either productivity or demand shocks, we find inventories...

We study the effects of tariffs and iceberg trade costs in a two-sector dynamic variation of the Melitz (2003) model extended to include a sunk cost of exporting, establishment-level uncertainty in productivity, capital accumulation, and material usage. We calibrate the model to match both...

We study empirically and theoretically the growth of U.S. manufacturing exports from 1987 to 2007. We use plant-level data on exporters' export intensity to identify the changes in iceberg costs over this period. Given this change in iceberg costs, we find that a GE model with heterogeneous...