Dynamics of Firms and Trade in General Equilibrium

Dekle, Robert; Jeong, Hyeok; Kiyotaki, Nobuhiro

doi:10.2139/ssrn.2574454

Dynamics of Firms and Trade in General Equilibrium

USC-INET Research Paper No. 15-12

55 Pages Posted: 11 Mar 2015

See all articles by Robert Dekle

Robert Dekle

University of Southern California - Department of Economics

Hyeok Jeong

KDI School of Public Policy and Management

Nobuhiro Kiyotaki

Princeton University - Department of Economics

There are 2 versions of this paper

Date Written: March 1, 2015

Abstract

This paper develops a dynamic general equilibrium model that attempts to reconcile the observation that aggregate movements of exports and imports are disconnected from real exchange rate movements, while firm-level exports co-move significantly with the real exchange rate. Firms are heterogeneous, facing recurrent aggregate and firm-product specific productivity shocks, choose which goods to export, and decide to enter and exit the business endogenously. We calibrate and estimate the model with both aggregate and firm level data.

Keywords: Trade and Macroeconomics, Firm Dynamics, Exchange Rate Disconnect, Current Account

JEL Classification: F44, F41, F32

Suggested Citation: Suggested Citation

Dekle, Robert and Jeong, Hyeok and Kiyotaki, Nobuhiro, Dynamics of Firms and Trade in General Equilibrium (March 1, 2015). USC-INET Research Paper No. 15-12, Available at SSRN: https://ssrn.com/abstract=2574454 or http://dx.doi.org/10.2139/ssrn.2574454