We build an equilibrium model of a small open economy with labor market frictions and
imperfectly enforced regulations. Heterogeneous firms sort into the formal or informal sector …

We propose a novel approach to estimate the trade elasticity at various horizons. When
large countries change Most Favored Nation (MFN) tariffs, small trading partners that are not …

Heavy tails play an important role in modern macroeconomics and international economics.
Previous work often assumes a Pareto distribution for firm size, typically with a shape …

We introduce a general quantifiable framework to study the location decisions of
multinational firms. In the model, firms choose in which locations to pay the fixed costs of …

Countries trade more if they liberalized their trade relationship earlier. We derive a gravity
equation featuring this path dependence due to sunk market-access costs that generate …

On the eve of its 60th anniversary, the gravity model of trade is a 'celebrity', due to its intuitive
appeal, solid theoretical foundations, and remarkable empirical success. Yet, many …

We develop a quantitative framework for decomposing trade patterns. We derive price
indexes that determine comparative advantage and the aggregate cost of living. If firms and …

Abstract The EU-South Korea Free Trade Agreement, which entered into force in 2015, is an
example of so-called “second-generation” regional trade agreements. Using the gravity …

The gravity model is the workhorse model of trade. Yet, many economists still view gravity as
a reduced‐form estimating equation and apply it without guidance from theory, while others …

I develop a dynamic theory of exporting that synthesizes two approaches: static models, in
which exporting costs depend on the number of foreign customers a firm serves in the …