The reaction of trade volumes to tariffs is far larger than what current models predict. One reason for this is that they abstract from endogenous productivity choices (“innovation”), which amplify this reaction. To show this, I develop a model of international trade with innovation, and...

We investigate the ability of workhorse structural change models in accounting for the business cycle properties of an economy. We consider three different preferences specifications: Herrendorf, Rogerson and Valentinyi (2014, HRV), Boppart (2014), and Comin, Lashkari and Mestieri (2021, CLM),...