Dynamics of Firms and Trade in General Equilibrium

Dynamics of Firms and Trade in General Equilibrium
Jeong, Hyeok
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Series/Report no.
KDI Working Paper Series;WP13-06
This paper develops a dynamic general equilibrium model that tries to reconcile the observation that aggregate movements of exports and imports are "disconnected" from real exchange rate movements, whil firm-level exports co-move significantly with the real exchange rate. Firms are heterogenous, facing recurrents aggregate and fir-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 from Japan.
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