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.
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Bibliographic InfoPaper provided by Harvard University Department of Economics in its series Scholarly Articles with number 4784027.
Date of creation: 2010
Date of revision:
Publication status: Published in Journal of the European Economic Association
Other versions of this item:
- Pol Antràs & Ricardo J. Caballero, 2010. "On the Role of Financial Frictions and the Saving Rate During Trade Liberalizations," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 442-455, 04-05.
- E2 - Macroeconomics and Monetary Economics - - 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
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- Matsuoka, Tarishi & Naito, Katsuyuki & Nishida, Keigo, 2013.
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Boston University - Department of Economics - Working Papers Series
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