Price Dynamics and the Financing Structure of Firms in Emerging Economies
Alan Finkelstein Shapiro (),
Andres Gonzalez Gomez,
Jessica Roldan-Pena and
Additional contact information
Andres Gonzalez Gomez: International Monetary Fund
Jessica Roldan-Pena: Banco de Mexico
Authors registered in the RePEc Author Service: Jessica Roldán Peña
No 339, 2018 Meeting Papers from Society for Economic Dynamics
We use a novel dataset that merges goods-level prices underlying the CPI in Mexico with the balance sheet information of Mexican publicly listed firms and study the connection between firms' financing structure and price dynamics in an emerging economy. First, we find that larger firms (in terms of sales and employees) tend to use more interfirm trade credit relative to bank credit. Second, these firms use interfirm trade credit as a mechanism to smooth variations in their prices. Third, all else equal, firms with a higher trade-to-bank credit ratio tend to lower prices. In turn, the behavior of these firms explains the negative relationship between aggregate trade credit growth and inflation in the data. A tractable New Keynesian model with search frictions in physical input markets sheds light on firms' structural characteristics as well as the economic mechanisms that rationalize our empirical findings.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Working Paper: Price Dynamics and the Financing Structure of Firms in Emerging Economies (2018)
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:sed018:339
Access Statistics for this paper
More papers in 2018 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 ().