Trade, Finance, and Endogenous Firm Heterogeneity
| Autor: | Rosario Crinò, Gino Gancia, Alessandra Bonfiglioli |
|---|---|
| Přispěvatelé: | Bonfiglioli, A, Crino, R, Gancia, G |
| Jazyk: | angličtina |
| Rok vydání: | 2019 |
| Předmět: |
Monetary economics
Models of Trade with Imperfect Competition and Scale Economies Empirical Studies of Trade Firm Heterogeneity Fragmentation Manufacturing 0502 economics and business Economics Statistical dispersion Trade finance firm heterogeneity 050207 economics Settore SECS-P/01 - Economia Politica Productivity Comparative advantage 050205 econometrics business.industry 05 social sciences International Trade Financial development Investment decisions Value (economics) Financial Development Settore SECS-P/02 - politica economica business General Economics Econometrics and Finance Trade finance |
| Popis: | We study how financial frictions affect firm-level heterogeneity and trade. We build a model in which productivity differences across monopolistically competitive firms are endogenous and depend on investment decisions at the entry stage. By increasing entry costs, financial frictions lower the exit cutoff and hence the value of investing in bigger projects with more dispersed outcomes. As a result, financial frictions make firms smaller and more homogeneous, and hinder the volume of exports. Export opportunities, instead, shift expected profits to the tail and increase the value of technological heterogeneity. We test these predictions using comparable measures of sales dispersion within 365 manufacturing industries in 119 countries, built from highly disaggregated US import data. Consistent with the model, financial development increases sales dispersion, especially in more financially vulnerable industries; sales dispersion is also increasing in measures of comparative advantage. These results help explaining the effect of financial development and factor endowments on export sales. We acknowledge financial support from the Barcelona GSE, the Spanish Ministry of Economy, and Competitiveness (ECO2014-55555-P and ECO2014-59805-P), and the Catalan AGAUR (2014-SGR-546). |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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