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The authors quantify the role of the extensive margin in the recent trade dynamics of selected countries that are running large and persistent trade imbalances. They find that the role of the extensive margin is quite substantial, although it varies in significance across the countries in the sample. Finally, they highlight differences in behaviour between the fixed-varieties and varieties-adjusted terms of trade. Their goal in this paper is to investigate the role of the extensive margin in accounting for the trade dynamics of countries running large external imbalances.
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