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Staggered Adjustment and Trade Dynamics

Author

Listed:
  • Samuel S. Kortum

    (University of Chicago)

  • Jonathan Eaton

    (Penn State University)

  • Costas Arkolakis

    (Yale University)

Abstract

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 signals her to optimize among all producers from all the countries. The model delivers structural equations for the impact of past trade on current trade. We use the model to explore the gradual adjustment of trade due to changes in trade costs.

Suggested Citation

  • Samuel S. Kortum & Jonathan Eaton & Costas Arkolakis, 2011. "Staggered Adjustment and Trade Dynamics," 2011 Meeting Papers 1322, Society for Economic Dynamics.
  • Handle: RePEc:red:sed011:1322
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Lewis, Logan T., 2014. "Menu Costs, Trade Flows, and Exchange Rate Volatility," International Finance Discussion Papers 1102, Board of Governors of the Federal Reserve System (U.S.).
    2. Logan Lewis, 2013. "Menu Costs, Trade Flows, and Exchange Rate Volatility," 2013 Meeting Papers 313, Society for Economic Dynamics.
    3. JaeBin Ahn & Alexander McQuoid, 2013. "Capacity Constrained Exporters: Micro Evidence and Macro Implications," Working Papers 1301, Florida International University, Department of Economics.
    4. Baier, Scott L. & Bergstrand, Jeffrey H. & Feng, Michael, 2014. "Economic integration agreements and the margins of international trade," Journal of International Economics, Elsevier, pages 339-350.
    5. Alexander F. McQuoid & JaeBin Ahn, 2015. "Capacity Constrained Exporters: Identifying Increasing Marginal Cost," Departmental Working Papers 49, United States Naval Academy Department of Economics.
    6. Scott Davis & Mario Crucini, 2013. "Distribution capital and the short- and long-run import demand elasticity," 2013 Meeting Papers 453, Society for Economic Dynamics.
    7. Crucini, Mario J. & Davis, J. Scott, 2016. "Distribution capital and the short- and long-run import demand elasticity," Journal of International Economics, Elsevier, pages 203-219.
    8. Kunal Dasgupta & Jordi Mondria, 2014. "Inattentive Importers," Working Papers tecipa-512, University of Toronto, Department of Economics.
    9. Doireann Fitzgerald & Stefanie Haller, 2014. "Exporters and Shocks: Dissecting the International Elasticity Puzzle," Working Papers 201408, School of Economics, University College Dublin.
    10. Jordi Mondria & Kunal Dasgupta, 2013. "International Trade with Inattentive Importers," 2013 Meeting Papers 1074, Society for Economic Dynamics.
    11. Alexander McQuoid & Loris Rubini, 2014. "The Opportunity Cost of Exporting," 2014 Meeting Papers 412, Society for Economic Dynamics.

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