Exports, Productivity, and Credit Constraints

Miaojie Yu ()
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Miaojie Yu: Peking University

Chapter Chapter 3 in Exchange Rate, Credit Constraints and China’s International Trade, 2021, pp 55-96 from Springer

Abstract: Abstract Recent Melitz-type (2003) intra-industry heterogenous trade models argue that a firm’s productivity has significant effects on the firm’s exports. This chapter examines how a firm’s credit constraints as well as its productivity affect its export decisions. We imbed the firm’s credit constraints into a Melitz-type general-equilibrium model by endogenizing the probability of the success of firm-specific projects. We show that, all else equal, it is easier for firms to enter the export market if (1) the probability of the success of their project is higher and consequently they have easier access to external finance from financial intermediaries; or (2) they have alternative sources, other than from financial intermediaries, to obtain funds. We test these theoretical hypotheses using firm-level data from Chinese manufacturing industries and find strong evidence supporting the predictions of the model.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-15-7522-8_3

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DOI: 10.1007/978-981-15-7522-8_3

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