How Important Are Terms Of Trade Shocks?*

Are Shocks to the Terms of Trade Shocks to Productivity?

__________________________________________________________________ International trade is frequently thought of as a production technology in which the inputs are exports and the outputs are imports. Exports are transformed into imports at the rate of the price of exports relative to the price of imports: the reciprocal of the terms of trade. Cast this way, a change in the terms of trade acts a...

How Important Are Sectoral Shocks?

I quantify the contribution of sectoral shocks to business cycle fluctuations in aggregate output. I develop and estimate a multi-industry general equilibrium model in which each industry employs the material and capital goods produced by other sectors. Using data on U.S. industries’ input prices and input choices, I find that the goods produced by different industries are complements to one an...

How Important are Trade Prices for Trade Flows?

U.S. imports and exports respond little to exchange rate changes in the short run. Pricing behavior has long been thought central to explaining this response: if local prices do not respond to exchange rates, neither will trade flows. Sticky prices and strategic complementarities in price setting generate sluggish responses, and they are necessary to match newly available international micro pr...

How Important Are Uncertainty Shocks in the Housing Market?

Online Appendix to "How Important Are Sectoral Shocks?"

In this section, I will apply plant-level input price variation and materials usage to provide an alternate set of estimates of εQ. To do so, I pursue the following two-part strategy. For each industry, I estimate how easily individual plants substitute across their factors of production, by relating plants’ materials purchases to their materials prices. Then, I apply the methods developed in O...