Liquidity Constrained Exporters - Sciences Po Access content directly
Journal Articles Journal of Economic Dynamics and Control Year : 2016

Liquidity Constrained Exporters

Thomas Chaney
  • Function : Author
  • PersonId : 1102039
  • IdRef : 200825801

Abstract

I propose a model of international trade with liquidity constraints. If firms must pay a fixed entry cost in order to access foreign markets, and if they face liquidity constraints to finance these costs, only those firms that have sufficient liquidity are able to export. A set of firms could profitably export, but are prevented from doing so because they lack sufficient liquidity. More productive firms that generate large liquidity from their domestic sales, and wealthier firms that inherit a large amount of liquidity, are more likely to export. This model offers a potential explanation for the apparent lack of sensitivity of exports to exchange rate fluctuations. When the exchange rate appreciates, existing exporters lose competitiveness abroad, and are forced to reduce their exports. At the same time, the value of domestic assets owned by potential exporters increases. Some liquidity constrained exporters start exporting. This dampens the anti-competitiveness impact of a currency appreciation. Under some conditions, it may reverse it altogether and increase aggregate exports. In this sense, the model is able to rationalize the co-existence of competitive devaluations and competitive revaluations.
Fichier principal
Vignette du fichier
2016-chaney-liquidity-constrained-exporters.pdf (511.97 Ko) Télécharger le fichier
Origin : Explicit agreement for this submission

Dates and versions

hal-03389283 , version 1 (20-10-2021)

Identifiers

Cite

Thomas Chaney. Liquidity Constrained Exporters. Journal of Economic Dynamics and Control, 2016, 72, pp.141 - 154. ⟨10.1016/j.jedc.2016.03.010⟩. ⟨hal-03389283⟩
115 View
238 Download

Altmetric

Share

Gmail Facebook X LinkedIn More