Financial frictions and new exporter dynamics
David Kohn (),
Fernando Leibovici () and
Department of Economics Working Papers from Universidad Torcuato Di Tella
This paper studies the role of financial frictions as a barrier to international trade. We study new exporter dynamics to identify how these frictions affect export decisions. We introduce a borrowing constraint and working capital requirements into a standard model of international trade, with exports more working-capital-intensive than domestic sales. Our model can quantitatively account for new exporter dynamics, in contrast to a model with sunk export entry costs. We provide additional evidence in support of our mechanism. We find that financial frictions reduce the impact of trade liberalization, suggesting that they constitute an important trade barrier.
Keywords: international trade; firm dynamics; new exporter; plant-level data; financial frictions; borrowing constraints; working capital; trade credit; liberalization (search for similar items in EconPapers)
JEL-codes: F1 F14 F4 G32 (search for similar items in EconPapers)
Pages: 56 pages
New Economics Papers: this item is included in nep-dge and nep-int
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Journal Article: FINANCIAL FRICTIONS AND NEW EXPORTER DYNAMICS (2016)
Working Paper: Financial Frictions and New Exporter Dynamics (2014)
Working Paper: Financial Frictions and Export Dynamics (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:udt:wpecon:2014_4
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