On the Role of Financial Frictions and the Saving Rate During Trade Liberalizations
AbstractWe study how financial frictions and the saving rate shape the long-run effects of trade liberalization on income, consumption, and the distribution of wealth in financially underdeveloped economies. In our model, regardless of whether the capital account is open or not, trade liberalization reduces the share of wealth in the hands of entrepreneurs and may well reduce steady-state consumption and income. Furthermore, trade opening is more likely to reduce steady-state consumption and output, the higher is the level of financial development. For economies with an open capital account, a higher saving rate also increases the likelihood that a trade liberalization leads to a reduction in steady-state consumption and output. (JEL: E2, F1, F2, F3, F4) (c) 2010 by the European Economic Association.
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Bibliographic InfoArticle provided by MIT Press in its journal Journal of the European Economic Association.
Volume (Year): 8 (2010)
Issue (Month): 2-3 (04-05)
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Web page: http://www.mitpressjournals.org/jeea
Other versions of this item:
- Caballero, Richard J. & Antras, Pol, 2010. "On the Role of Financial Frictions and the Saving Rate during Trade Liberalizations," Scholarly Articles 4784027, Harvard University Department of Economics.
- E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
- F1 - International Economics - - Trade
- F2 - International Economics - - International Factor Movements and International Business
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chesnokova, Tatyana, 2007. "Immiserizing deindustrialization: A dynamic trade model with credit constraints," Journal of International Economics, Elsevier, vol. 73(2), pages 407-420, November.
- Mario Larch , & Wolfgang Lechthaler, 2011.
"Whom to Send to Doha? The Shortsighted Ones!,"
Kiel Working Papers
1695, Kiel Institute for the World Economy.
- Matsuoka, Tarishi & Naito, Katsuyuki & Nishida, Keigo, 2013.
"The Politics of Financial Development and Capital Accumulation,"
50181, University Library of Munich, Germany.
- Tarishi Matsuoka & Katsuyuki Naito & Keigo Nishida, 2011. "The Politics of Financial Development and Capital Accumulation," KIER Working Papers 793, Kyoto University, Institute of Economic Research.
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