TY  - JOUR
AU  - Rangan,Subramanian
AU  - Lawrence,Robert Z.
TI  - Search and Deliberation in International Exchange:  Learning from Multinational Trade About Lags, Distance Effects, and Home Bias
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7012
PY  - 1999
Y2  - March 1999
UR  - http://www.nber.org/papers/w7012
L1  - http://www.nber.org/papers/w7012.pdf
N1  - Author contact info:
Robert Z. Lawrence
JFK School of Government
79 JFK Street
Cambridge, MA  02138
Tel: 617/495-1118
Fax: 617/496-2850
E-Mail: robert_lawrence@harvard.edu
AB  - This paper compares the responses of intra- and extra-firm trade to exchange rate changes. It does so both to inform the debate on whether these responses are qualitatively different and to improve understanding of the microfoundations of features of trade behavior such as long adjustment lags, the large impact of distance, and the presence of significant home bias.  We argue that the informational problems posed by search (acts identifying potential exchange partners) and deliberation (acts assessing their reliability and trustworthiness) play a key role in explaining these features and suggest that multinationals should have advantages in overcoming these problems. Indeed we find that the responses of multinationals to exchange rate changes are both larger and more rapid.
ER  -