@article {80966, title = {Trade Adjustment and Productivity in Large Crises}, journal = {American Economic Review}, volume = {104}, number = {3}, year = {2014}, pages = {793-831}, abstract = {We empirically characterize the mechanics of trade adjustment during the Argentine crisis. Though imports collapsed by 70 percent from 2000-2002, the entry and exit of firms or products at the country level played a small role. The within-firm churning of imported inputs, however, played a sizeable role. We build a model of trade in intermediate inputs with heterogeneous firms, fixed import costs, and roundabout production. Import demand is non-homothetic and the implications of an import price shock depend on the full distribution of firm-level adjustments. An import price shock generates a significant decline in productivity.\ }, url = {http://dx.doi.org/10.1257/aer.104.3.793}, author = {Gita Gopinath and Brent Neiman} }