Understanding US export dynamics: does modelling the extensive margin of exports help?

Staff working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 24 April 2020

Staff Working Paper No. 859

By Aydan Dogan and Ida Hjortsoe

This paper evaluates whether recent advances in modelling the extensive margin of exports contribute to our understanding of export fluctuations over the business cycle. Using US and euro-area data, we estimate a general equilibrium model in which the extensive margin of exports varies over the business cycle. A comparison of its performance to two similar models that differ in their modelling of the extensive margin of exports shows that, while recent advances in modelling the extensive margin of trade help replicate exports dynamics, this is not the result of a good fit to the observed extensive margin of exports: the model-implied extensive margin of exports varies considerably more than the data suggests.

PDFUnderstanding US export dynamics: does modelling the extensive margin of exports help?

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