Information frictions are often invoked to explain low levels of international trade beyond those that measured trade frictions (tariffs, transportation costs, etc.) can explain. But to explain why international trade is lower then domestic trade, home firms have to know something that...

Steven Weinberg (2018) says: (1) new theories that target new observations should be constrained to agree with observations successfully represented by existing theories; and (2) preserving successes of earlier theories helps to discover unanticipated understandings of yet other phenomena....

Common wisdom dictates that uncertainty impedes trade--we show that uncertainty can fuel more trade in a simple general equilibrium trade model with information frictions. In equilibrium, increases in uncertainty increase both the mean and the variance in returns to exporting implying that trade...