Business Conditions and Default Risks Across Countries
AbstractThe risk of default that business firms face is very significant and differs widely across countries. This paper explores the links between countries’ business conditions and international trade embedment and the default risk at the country level from a theoretical point of view. Our main contribution is to set up a general equilibrium model which allows us to derive sharp predictions concerning how key factors which shape a country’s business and trade environment impact on the default risk of firms which operate in these environments. The predictions are in accord with readily available data.
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Bibliographic InfoPaper provided by Bavarian Graduate Program in Economics (BGPE) in its series Working Papers with number 098.
Length: 29 pages
Date of creation: Apr 2011
Date of revision:
firm death; firm heterogeneity; business conditions and firm productivity; trade integration;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F15 - International Economics - - Trade - - - Economic Integration
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
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