Hysteresis in Trade
The paper presents a model of hysteresis in trade which is based on the existence of sunk market-entry costs. The study concentrates on the aspect of two models. In both models an exchange rate overvaluation leads to additional entry by foreign firms. The models differ in the accounts of why the foreign firms do not exit after the exchange rate shock passes.
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Volume (Year): 15 (1990)
Issue (Month): 2 ()
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