Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/210781
Authors: 
Devereux, Michael B.
Dong, Wei
Tomlin, Ben
Year of Publication: 
2019
Series/Report no.: 
Bank of Canada Staff Working Paper 2019-41
Abstract: 
Using highly disaggregated transaction-level trade data, we document the importance of new firmlevel trade partner relationships and the addition of new products to existing relationships in driving long-run import flows. Moreover, we find that these margins are sensitive to movements in the exchange rate. We rationalize these findings in a model of international trade with endogenous matching between heterogenous importers and exporters. Simulations of the model highlight a new channel through which exchange rate movements can affect trade - through the short-run formation of new trade relationships and the range of products traded within relationships - which can impact long-run flows.
Subjects: 
International topics
Exchange rates
Firm dynamics
JEL: 
F1
F4
Document Type: 
Working Paper

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