Product Quality and International Price Dynamics over the Business Cycle
研究发现国际商业周期中贸易条件与产出弱相关等谜题在近期数据中减弱或消失，并提出企业通过调整产品质量和价格来响应技术冲击的新机制，能同时解释新旧事实。
Two puzzling facts of international real business cycles are (1) weak or negative correlations between the terms of trade and output, and (2) a rise in relative consumption for countries where national goods become relatively more expensive. We show that these puzzles either vanish or become much weaker in recent data. We propose a new mechanism that generates endogenous international price movements that are consistent with both the ‘old’ and the ‘new’ facts. In this mechanism, firms operating in a monopolistically competitive environment adjust price and quality of their products in response to technological shocks. This model is consistent with the old facts if price levels are not adjusted for quality. Instead, if quality adjustments to price level are introduced, then the model’s properties are in line with the new facts.