Capital market imperfections and trade liberalization in general equilibrium

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Capital market imperfections and trade liberalization in general equilibrium. / Irlacher, Michael; Unger, Florian.
in: Journal of Economic Behavior and Organization, Jahrgang 145, 01.2018, S. 402-423.

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

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@article{8c9e96909537419c8c924f00b329fa36,
title = "Capital market imperfections and trade liberalization in general equilibrium",
abstract = "This paper develops a new international trade model with firm-specific credit frictions and endogenous borrowing costs in general equilibrium. We highlight new implications of globalization when general equilibrium effects on capital markets are present. In particular, we show that globalization increases the share of financially constrained firms and affects producers very differently depending on their exposure to credit frictions. While the positive effect of globalization dominates for unconstrained firms, higher borrowing costs and tougher competition especially hurt credit-rationed producers. We show that these new adjustments increase the heterogeneity among firms and reduce welfare gains from trade. Our theory is consistent with new empirical patterns from World Bank firm-level data. We show that credit frictions are positively related to the degree of product competition and to the variance of sales across firms.",
keywords = "Credit constraints, General equilibrium, Globalization, Imperfect capital markets, Welfare, Economics",
author = "Michael Irlacher and Florian Unger",
note = "Publisher Copyright: {\textcopyright} 2017 Elsevier B.V.",
year = "2018",
month = jan,
doi = "10.1016/j.jebo.2017.11.029",
language = "English",
volume = "145",
pages = "402--423",
journal = "Journal of Economic Behavior and Organization",
issn = "0167-2681",
publisher = "Elsevier B.V.",

}

RIS

TY - JOUR

T1 - Capital market imperfections and trade liberalization in general equilibrium

AU - Irlacher, Michael

AU - Unger, Florian

N1 - Publisher Copyright: © 2017 Elsevier B.V.

PY - 2018/1

Y1 - 2018/1

N2 - This paper develops a new international trade model with firm-specific credit frictions and endogenous borrowing costs in general equilibrium. We highlight new implications of globalization when general equilibrium effects on capital markets are present. In particular, we show that globalization increases the share of financially constrained firms and affects producers very differently depending on their exposure to credit frictions. While the positive effect of globalization dominates for unconstrained firms, higher borrowing costs and tougher competition especially hurt credit-rationed producers. We show that these new adjustments increase the heterogeneity among firms and reduce welfare gains from trade. Our theory is consistent with new empirical patterns from World Bank firm-level data. We show that credit frictions are positively related to the degree of product competition and to the variance of sales across firms.

AB - This paper develops a new international trade model with firm-specific credit frictions and endogenous borrowing costs in general equilibrium. We highlight new implications of globalization when general equilibrium effects on capital markets are present. In particular, we show that globalization increases the share of financially constrained firms and affects producers very differently depending on their exposure to credit frictions. While the positive effect of globalization dominates for unconstrained firms, higher borrowing costs and tougher competition especially hurt credit-rationed producers. We show that these new adjustments increase the heterogeneity among firms and reduce welfare gains from trade. Our theory is consistent with new empirical patterns from World Bank firm-level data. We show that credit frictions are positively related to the degree of product competition and to the variance of sales across firms.

KW - Credit constraints

KW - General equilibrium

KW - Globalization

KW - Imperfect capital markets

KW - Welfare

KW - Economics

UR - http://www.scopus.com/inward/record.url?scp=85037038624&partnerID=8YFLogxK

U2 - 10.1016/j.jebo.2017.11.029

DO - 10.1016/j.jebo.2017.11.029

M3 - Journal articles

AN - SCOPUS:85037038624

VL - 145

SP - 402

EP - 423

JO - Journal of Economic Behavior and Organization

JF - Journal of Economic Behavior and Organization

SN - 0167-2681

ER -

DOI