I explore empirically the interactions between international trade and stock markets. A simple "Lucas-tree" two-country, two-good, free-trade model with complete asset markets predicts that stock markets forecast trade flows and that stock markets react immediately and fully to news about...

A huge body of empirical and theoretical literature has emerged on the relationship between foreign exchange (FX) uncertainty and international trade. Empirical findings about the impact of FX uncertainty on trade figures are at best weak and often ambiguous with respect to its direction. Almost...