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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5541.
Length: 31 pages
Date of creation: Feb 2011
Date of revision:
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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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-12 (All new papers)
- NEP-BAN-2011-03-12 (Banking)
- NEP-BEC-2011-03-12 (Business Economics)
- NEP-INT-2011-03-12 (International Trade)
- NEP-OPM-2011-03-12 (Open Economy Macroeconomics)
- NEP-RMG-2011-03-12 (Risk Management)
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- Philipp J.H. Schröder & Allan Sørensen, 2011.
"Firm Exit, Technological Progress and Trade,"
Economics Working Papers
2011-17, School of Economics and Management, University of Aarhus.
- Wim Naudé, 2011. "Foreign Aid for Innovation: The Missing Ingredient in Private Sector Development?," Working Papers 2011/35, Maastricht School of Management.
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