 Capital controls and firm performanceEugenia Andreasen, Sofia Bauducco and Evangelina Dardati Journal of International Economics, 2024, vol. 150, issue C Abstract: This paper studies the differential effects of capital controls (CCs) on firms’ performance depending on the firm’s production technology and export status. We empirically characterize the firm’s responses to the introduction of a CC using the Chilean encaje implemented between 1991 and 1998. Motivated by the empirical insights, we build a general equilibrium model with heterogeneous firms, financial constraints and international trade and calibrate it to the Chilean economy. We find that CCs have heterogeneous effects on firms. Exporting firms operating in more capital-intensive sectors are more negatively affected than exporting firms operating in less capital-intensive sectors. Non-exporting firms in capital-intensive sectors experience more negative effects on capital than firms in less-capital intensive sectors, but the opposite is true for domestic sales. These results are a consequence of the increase in financing costs, the depreciation of the real exchange rate, and compositional effects on the mass of exporters and non-exporters. Keywords: Capital controls; Firm dynamics; Financial frictions; International trade (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:150:y:2024:i:c:s0022199624000217 DOI: 10.1016/j.jinteco.2024.103897 Access Statistics for this article Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and RodrÃguez-Clare, Andrés More articles in Journal of International Economics from Elsevier |
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