Financial Frictions and Export Dynamics in Large Devaluations
David Kohn (),
Fernando Leibovici () and
No 2017-13, Working Papers from Federal Reserve Bank of St. Louis
We study the role of financial frictions and balance-sheet effects in accounting for the dynamics of aggregate exports in large devaluations. We investigate a small open economy with heterogeneous firms and endogenous export decisions in which firms face financing constraints and debt can be denominated in foreign units. Despite the negative impact of these channels on capital accumulation and output at the firm-level, we find that they only explain a modest fraction of the gradual increase of exports observed in these episodes. Exports increase since financially-constrained exporters are able to reallocate sales across markets. We show analytically the role of this mechanism on exports adjustment and document its importance using plant-level data.
Keywords: Financial frictions; large devaluations; export dynamics; balance-sheet effects (search for similar items in EconPapers)
JEL-codes: F1 F4 G32 (search for similar items in EconPapers)
Date: 2017-05-01, Revised 2019-09-13
New Economics Papers: this item is included in nep-acc, nep-bec, nep-cfn, nep-dge, nep-int and nep-opm
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Journal Article: Financial frictions and export dynamics in large devaluations (2020)
Working Paper: Financial Frictions and Export Dynamics in Large Devaluations (2018)
Working Paper: Financial Frictions and Export Dynamics in Large Devaluations (2017)
Working Paper: Financial Frictions and Export Dynamics in Large Devaluations (2015)
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