This paper shows that the pricing behavior of exporters exhibits a "forward-looking" nature due to the existence of sticky prices. It offers a channel by which the expectations of future exchange rates can affect current export prices at both the firm and product level. By exploring bilateral...

This paper presents theory and empirical evidence on that a forward-looking potential importer facing sunk costs will respond to expectation of future exchange rate fluctuations. This finding indicates the importance of sunk costs in firms' decisions to import goods. Building upon a...

This paper presents theory and evidence from highly disaggregated Chinese data that tighter credit constrains force firms to produce lower quality. The paper modifies Melitz's (2003) model of trade with heterogeneous firms by introducing quality choice and credit constraints. The quality sorting...

This paper presents theory and evidence from highly disaggregated Chinese data that tariff reductions induce a country's producers to upgrade the quality of the goods that they export. The paper first documents two stylized facts regarding the effect of trade liberalization on export prices and...

Modern trade models attribute the dispersion of international prices to physical and man-made barriers to trade, to the pricing-to-market by heterogeneous producers, and to differences in the quality of output offered by firms. This paper analyzes a quantitative general equilibrium model that...

This paper examines the relationship between the credit constraints faced by a firm and the unit value prices of its exports. The paper modifies Arkolakisś (2010) model of trade with heterogeneous firms by introducing endogenous quality and credit constraints. The model predicts that tighter...