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Working Paper
Information costs, networks and intermediation in international trade
This paper is motivated by the observation that intermediaries play an important role in international trade. The matching role of intermediaries is examined in a pairwise matching model with two-sided information asymmetry, where intermediaries develop contacts. Intermediation expands the set of matching technologies available to traders, while convexity in network-building costs with respect to network size gives rise to both direct and indirect trade in equilibrium. The trade pattern depends on the relative responsiveness of the direct and indirect matching technologies to information ...
Working Paper
Product durability and trade volatility
One of the main causes behind the trade collapse of 2008?09 was a significant fall in the demand for durable goods. This paper develops a small country, overlapping generations model of international trade in which goods durability gives rise to a more than proportional fall in trade volumes, as observed in 2008?09. The model has three goods?two durable, traded goods and one nondurable, nontraded good and two factors of production. The durability of goods affects consumers' lifetime wealth and their optimal consumption bundle across goods and time periods. A uniform productivity shock reduces ...