Baley, IsaacVeldkamp, LauraWaugh, MichaelUniversitat Pompeu Fabra. Departament d'Economia i Empresa2024-11-142024-11-142016-03-01Journal of International Economics, Vol.126, September 2020http://hdl.handle.net/10230/27210Common wisdom dictates that uncertainty impedes trade we show that uncertainty can fuel more trade in a simple general equilibrium trade model with information frictions. In equilibrium, increases in uncertainty increase both the mean and the variance in returns to exporting implying that trade can increase or decrease with uncertainty depending on preferences. Under general conditions on preferences, we characterize the importance of these forces using a sufficient statistics approach. Higher uncertainty leads to increases in trade because agents receive improved terms of trade, particularly in states of nature where consumption is most valuable. Trade creates value, in part, by offering a mechanism to share risk and risk sharing is most effective when both parties are uninformed.application/pdfengL'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commonsinfo:eu-repo/semantics/workingPaperinformation asymmetryglobalizationrisk sharinginternational tradeMacroeconomics and International Economicsinfo:eu-repo/semantics/openAccess