EconPapers    
Economics at your fingertips  
 

Microeconomic uncertainty, international trade, and aggregate fluctuations

George Alessandria (), Horag Choi (), Joseph Kaboski and Virgiliu Midrigan ()

Journal of Monetary Economics, 2015, vol. 69, issue C, 20-38

Abstract: The extent and direction of causation between micro volatility and business cycles are debated. We examine, empirically and theoretically, the source and effects of fluctuations in the dispersion of producer-level sales and production over the business cycle. On the theoretical side, we study the effect of exogenous first- and second-moment shocks to producer-level productivity in a two-country DSGE model with heterogeneous producers and an endogenous dynamic export participation decision. First-moment shocks cause endogenous fluctuations in producer-level dispersion by reallocating production internationally, while second-moment shocks lead to increases in trade relative to GDP in recessions. Empirically, using detailed product-level data in the motor vehicle industry and industry-level data of U.S. manufacturers, we find evidence that international reallocation is indeed important for understanding cross-industry variation in cyclical patterns of measured dispersion.

Keywords: Sunk cost; Establishment heterogeneity; Exporting; Uncertainty (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304393214001640
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Microeconomic uncertainty, international trade, and aggregate fluctuations (2014) Downloads
Working Paper: Microeconomic Uncertainty, International Trade, and Aggregate Fluctuations (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:69:y:2015:i:c:p:20-38

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-10-08
Handle: RePEc:eee:moneco:v:69:y:2015:i:c:p:20-38