Financing Scale and Relative Prices
Joseph Kaboski and
Francisco Buera ()
No 935, 2007 Meeting Papers from Society for Economic Dynamics
We study the cross-country relationship between the relative price of tradables and income per capita. The theory developed is based on financial frictions and differences in the efficient scale of production across sectors. Countries with more severe financial frictions are more dependent on self-financing, and so produce at less than efficient scale. Since tradables tend to have larger efficient scales, financial frictions and smaller scale of productions disproportionately lower productivity in tradables. We evaluate the theory using cross-country data on relative prices and financial intermediation, as well as microdata on establishment sizes in the U.S. and Mexico.
References: Add references at CitEc
Citations Track citations by RSS feed
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:red:sed007:935
Access Statistics for this paper
More papers in 2007 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().