External Shocks, Trade Margins, and Macroeconomic Dynamics
This paper studies the role of the exchange rate regime for trade of new products. It first provides VAR evidence that a rise in external productivity shifts trade away from new products and more so in fixed regimes. Then, it presents a model with firm dynamics in line with this evidence. We argue t...
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MDPI AG
2020-01-01
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| Series: | Economies |
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| Online Access: | https://www.mdpi.com/2227-7099/8/1/6 |
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doaj-ef17f78d28bf4c179a4208714a96296e2020-11-25T01:33:22ZengMDPI AGEconomies2227-70992020-01-0181610.3390/economies8010006economies8010006External Shocks, Trade Margins, and Macroeconomic DynamicsStefano D’Addona0Lilia Cavallari1Department of Political Science, University of Roma Tre, Via Ostiense, 159, 00154 Roma, ItalyDepartment of Political Science, University of Roma Tre, Via Ostiense, 159, 00154 Roma, ItalyThis paper studies the role of the exchange rate regime for trade of new products. It first provides VAR evidence that a rise in external productivity shifts trade away from new products and more so in fixed regimes. Then, it presents a model with firm dynamics in line with this evidence. We argue that exchange rate policy can affect firms’ entry decisions with consequences for the competitiveness of a country’s exports well beyond the short run. In our setup, fixed exchange rates can foster the competitiveness of firms that trade new products, while flexible rates favor firms that produce mature products.https://www.mdpi.com/2227-7099/8/1/6trade marginsfirm entryexchange rate policyinternational business cyclepanel vardsge modelcomparative advantage |
| collection |
DOAJ |
| language |
English |
| format |
Article |
| sources |
DOAJ |
| author |
Stefano D’Addona Lilia Cavallari |
| spellingShingle |
Stefano D’Addona Lilia Cavallari External Shocks, Trade Margins, and Macroeconomic Dynamics Economies trade margins firm entry exchange rate policy international business cycle panel var dsge model comparative advantage |
| author_facet |
Stefano D’Addona Lilia Cavallari |
| author_sort |
Stefano D’Addona |
| title |
External Shocks, Trade Margins, and Macroeconomic Dynamics |
| title_short |
External Shocks, Trade Margins, and Macroeconomic Dynamics |
| title_full |
External Shocks, Trade Margins, and Macroeconomic Dynamics |
| title_fullStr |
External Shocks, Trade Margins, and Macroeconomic Dynamics |
| title_full_unstemmed |
External Shocks, Trade Margins, and Macroeconomic Dynamics |
| title_sort |
external shocks, trade margins, and macroeconomic dynamics |
| publisher |
MDPI AG |
| series |
Economies |
| issn |
2227-7099 |
| publishDate |
2020-01-01 |
| description |
This paper studies the role of the exchange rate regime for trade of new products. It first provides VAR evidence that a rise in external productivity shifts trade away from new products and more so in fixed regimes. Then, it presents a model with firm dynamics in line with this evidence. We argue that exchange rate policy can affect firms’ entry decisions with consequences for the competitiveness of a country’s exports well beyond the short run. In our setup, fixed exchange rates can foster the competitiveness of firms that trade new products, while flexible rates favor firms that produce mature products. |
| topic |
trade margins firm entry exchange rate policy international business cycle panel var dsge model comparative advantage |
| url |
https://www.mdpi.com/2227-7099/8/1/6 |
| work_keys_str_mv |
AT stefanodaddona externalshockstrademarginsandmacroeconomicdynamics AT liliacavallari externalshockstrademarginsandmacroeconomicdynamics |
| _version_ |
1725077643052711936 |