Macroeconomic Analysis on the Basis of Trade Theory: A Review Essay

Xiang Gao

MPRA Paper from University Library of Munich, Germany

Abstract: This paper reviews the branch of literature that applies models developed in international trade theory (Microeconomics) to explain phenomena found in international finance (Macroeconomics). Among all international trade models, the New New Trade Theory with productivity heterogeneity across firms in the same industry has proved to be a powerful tool to bridge the gap between international trade and finance. As a result, this review focuses on several papers in this nascent field, where the behavior of macroeconomic indicators are generated from sound microeconomic foundation.

Keywords: Heterogeneous firm; Price fluctuation; Innovation (search for similar items in EconPapers)
JEL-codes: E31 F12 O31 (search for similar items in EconPapers)
Date: 2009-08
New Economics Papers: this item is included in nep-mac
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