Business Conditions and Default Risks across Countries

Michael P. Pflüger () and Stephan Russek ()
Additional contact information
Michael P. Pflüger: University of Würzburg
Stephan Russek: University of Passau

No 5541, IZA Discussion Papers from IZA Network @ LISER

Abstract: The risk of default that business firms face is very significant and differs widely across countries. This paper explores the links between countries' business conditions and international trade embedment and the default risk at the country level from a theoretical point of view. Our main contribution is to set up a general equilibrium model which allows us to derive sharp predictions concerning how key factors which shape a country's business and trade environment impact on the default risk of firms which operate in these environments. The predictions are in accord with readily available data.

Keywords: business conditions and firm productivity; firm death; trade integration; firm heterogeneity (search for similar items in EconPapers)
JEL-codes: F12 F13 F15 L25 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2011-02
New Economics Papers: this item is included in nep-ban, nep-bec, nep-int, nep-opm and nep-rmg
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Published - revised version published in: Open Economies Review, 2013, 24 (5), 963-976

Downloads: (external link)
https://docs.iza.org/dp5541.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp5541

Access Statistics for this paper

More papers in IZA Discussion Papers from IZA Network @ LISER Contact information at EDIRC.
Bibliographic data for series maintained by Mark Fallak ().