Atkeson, Andrew; Burstein, Ariel - National Bureau of Economic Research (NBER) - 2007
We present a general equilibrium model of the decisions of firms to innovate and to engage in international trade. We … use the model to analyze the impact of a reduction in international trade costs on firms' process and product innovative … activity. We first show analytically that if all firms export with equal intensity, then a reduction in international trade …