Two puzzling facts of international real business cycles are (1) weak or negative correlations between the terms of trade and output, and (2) a rise in relative consumption for countries where national goods become relatively more expensive. We show that these puzzles either vanish or become much weaker in recent data. We propose a new mechanism that generates endogenous international price movements that are consistent with both the ‘old’ and the ‘new’ facts. In this mechanism, firms operating in a monopolistically competitive environment adjust price and quality of their products in response to technological shocks. This model is consistent with the old facts if price levels are not adjusted for quality. Instead, if quality adjustments to price level are introduced, then the model’s properties are in line with the new facts.

中文翻译：

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商业周期中的产品质量和国际价格动态

国际实际商业周期的两个令人费解的事实是：(1) 贸易条件和产出之间的弱相关或负相关，以及 (2) 本国商品变得相对昂贵的国家的相对消费增加。我们表明，这些谜题在最近的数据中要么消失要么变得更弱。我们提出了一种新机制，可以产生与“旧”和“新”事实相一致的内生国际价格变动。在这种机制中，在垄断竞争环境中运营的公司会根据技术冲击调整其产品的价格和质量。如果价格水平未针对质量进行调整，则该模型与旧事实一致。相反，如果引入对价格水平的质量调整，则模型的属性符合新的事实。