Varieties and the transfer problem

摘要: Abstract We revisit the classic transfer problem, accounting for two channels of adjustment: increased trade in existing goods and services (the intensive margin) net creation destruction product varieties extensive margin). Over medium term, latter reduces scope real exchange rate terms variability response to cross-border flows. embed our analysis popular models current account adjustment, where initial imbalances are driven by domestic demand — or foreign supply saving, possibly associated with over-optimistic expectations. Simulation exercises based on 2006 data suggest that a size pre-crisis U.S. deficit may require only moderate trend depreciation terms, aggregate welfare impact is disconnected from relative price correction.