Trade Flows and Exchange Rates: Importers, Exporters and Products

Michael Devereux, Wei Dong and Ben Tomlin

No 26314, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using highly-disaggregated transaction-level trade data, we document the importance of new firm-level trade partner relationships and the addition of new products to existing relationships in driving long-run import flows. Moreover, we find that these margins are sensitive to movements in the exchange rate. We rationalize these findings in a model of international trade with endogenous matching between heterogenous importers and exporters. Simulations of the model highlight a new channel through which exchange rate movements can affect trade—through the short-run formation of new trade relationships and the range of products traded within relationships, which can impact long-run flows.

JEL-codes: F1 F4 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-int and nep-opm
Note: IFM
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Working Paper: Trade Flows and Exchange Rates: Importers, Exporters and Products (2019)
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