Working Capital, Trade and Macro Fluctuations

Se-Jik Kim and Hyun Song Shin
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Se-Jik Kim: Seoul National University

No 1465, Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies.

Abstract: In addressing the precipitous drop in trade volumes in the recent crisis, the real and financial explanations have sometimes been juxtaposed as competing explanations. However, they can be reconciled by appeal to the time dimension of production and the working capital demands associated with offshoring and vertical specialization of production. We explore a model of manufacturing production chains with offshoring where firms choose their time profile of production and where inventories, accounts receivable, and productivity are procyclical and track financial conditions.

Keywords: offshoring; manufacturing; production (search for similar items in EconPapers)
JEL-codes: D21 D24 D51 E23 F20 (search for similar items in EconPapers)
Date: 2013-06
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:pri:cepsud:235

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