Recent work recognizes the importance of firm-level heterogeneity leading to selection into the export market and the importance of this heterogeneity in analyzing aggregate trade flows. This paper adapts Helpman et al. (2008) to a panel framework and confirms the importance of firm-level selection and productivity heterogeneity in the time series of export data. The paper also compares and contrasts the effects on trade of European efforts to stabilize exchange rates prior to the introduction of the euro with the effects on trade following the introduction of the euro.
Accepted Author Manuscript
Whitten, G. (2012). A framework for to correct the firm heterogeneity with panel data: Helpman, Melitz, and Rubinstein with panel data. Unpublished manuscript. Available at http://works.bepress.com/gregory_whitten/7