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Financial Frictions and New Exporter Dynamics

Fernando Leibovici (), David Kohn () and Michal Szkup

Working Papers from York University, Department of Economics

Abstract: This paper studies the role of financial frictions as a barrier to international trade. We investigate new exporter dynamics in order to identify the extent to which these frictions affect export decisions. We study an economy with heterogeneous firms subject to financing constraints and working capital requirements, and calibrate it to match key moments from Chilean plant-level data. In contrast to standard models of international trade with sunk export entry costs, our model can account for new exporter dynamics. We find that financial frictions reduce the impact of a trade liberalization, suggesting that they constitute an important trade barrier.

Pages: 55 pages
Date: 2014-08-11
New Economics Papers: this item is included in nep-dge and nep-int
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Working Paper: Financial frictions and new exporter dynamics (2014) Downloads
Working Paper: Financial Frictions and Export Dynamics (2011) Downloads
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