Credit Market Quality, Innovation and Trade

Cristina Terra and Vasconcelos Enrico
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Vasconcelos Enrico: Graduate School of Economics, Fundação Getulio Vargas, and Secretaria de Política Econômica, Ministério da Fazenda

No 2010-08, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: Using a general equilibrium model with private R&D financing, this article investigates the impact of trade openness to trade on growth and on welfare for two countries equal in all aspects, except for the quality of credit markets. We show that opening to trade increases growth in the country with better credit markets (North) and decreases it in the other country (South). With respect to trade pattern, South imports high tech goods and exports traditional goods. In terms of welfare, opening to trade may lower the welfare of individuals in the short run, but in the long run all of them are better o¤ under free trade than if they were under autarky.

Keywords: credit markets; growth; trade pattern (search for similar items in EconPapers)
JEL-codes: F12 G11 O16 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-int, nep-mic and nep-opm
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http://thema.u-cergy.fr/IMG/documents/2010-08.pdf (application/pdf)

Related works:
Journal Article: Credit Market Quality, Innovation and Trade (2020)
Working Paper: Credit Market Quality, Innovation and Trade (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2010-08

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