Published American Economic Review Online 1 Dec 2025 Published Dec 2025Firm Responses and Wage Effects of Foreign Demand Shocks with Fixed Labor Costs and MonopsonyEmmanuel Dhyne · Ayumu Ken Kikkawa · Toshiaki Komatsu · Magne Mogstad · Felix TintelnotThe paper asks three related questions in the context of Belgium, a small open economy: (1) What do firms' responses to demand shocks reveal about their cost structures? (2) What are the worker and …