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Dynamics of Firms and Trade in General Equilibrium

Author

Listed:
  • Robert Dekle

    (University of Southern California)

  • Hyeok Jeong

    (KDI School of Public Policy and Management)

  • Nobuhiro Kiyotaki

    (Princeton University)

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 heterogenous, 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 from Japan.

Suggested Citation

  • Robert Dekle & Hyeok Jeong & Nobuhiro Kiyotaki, 2014. "Dynamics of Firms and Trade in General Equilibrium," Working Papers 2014-3, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2014-3
    as

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    File URL: http://www.princeton.edu/~kiyotaki/papers/DJK_March12_2014(1).pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    General Equilibrium Model; Exchange Rate; Exports and Imports; Japan;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F19 - International Economics - - Trade - - - Other

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