Midrigan, Virgiliu; Kaboski, Joe; Alessandria, George - Society for Economic Dynamics - SED - 2012
The large, persistent fluctuations in international trade that can not be explained in standard models by either … changes in expenditures or relative prices are often attributed to trade wedges. We show that these trade wedges can reflect … cycles with an inventory management decision can generate trade flows and wedges consistent with the data. We find that …