Interest Rates and World Trade: An 'Austrian' Perspective

Pol Antras

No 30844, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a framework to study the interplay between world trade and interest rates. The model incorporates an explicit notion of time and of production length, along the lines of the ‘Austrian’ tradition of Böhm-Bawerk (1889). Changes in the interest rate affect production lengths, labor productivity, and the financial costs of exporting. I decompose the response of the volume of world trade to changes in the interest rate into four components: (i) a labor productivity effect, (ii) a propensity to consume out of labor income effect, (iii) a temporal dimension of variable trade costs effect, and (iv) a selection into exporting effect.

JEL-codes: F1 F10 F12 F65 (search for similar items in EconPapers)
Date: 2023-01
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Published as Pol Antràs, 2023. "Interest Rates and World Trade: An “Austrian” Perspective," AEA Papers and Proceedings, vol 113, pages 65-69.

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