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NO CREDIT, NO GAIN: TRADE LIBERALIZATION DYNAMICS, PRODUCTION INPUTS, AND FINANCIAL DEVELOPMENT.
- Source :
- International Economic Review; May2023, Vol. 64 Issue 2, p809-836, 28p, 7 Charts, 6 Graphs
- Publication Year :
- 2023
-
Abstract
- We study the role of financial development on the aggregate implications of reducing import tariffs on capital and intermediate inputs. We document empirically that financially underdeveloped economies feature a slower aggregate response following trade liberalization. To quantify these effects, we set up a general equilibrium model with heterogeneous firms subject to collateral constraints and estimate it using Colombian plantālevel data. We find that low financial development substantially limited the gains from trade liberalization in Colombia in the early 1990s. More broadly, we find that low financial development substantially limits both the aggregate and welfare gains from tariff reductions. [ABSTRACT FROM AUTHOR]
- Subjects :
- FOREIGN investments
FREE trade
FINANCIAL liberalization
TARIFF
Subjects
Details
- Language :
- English
- ISSN :
- 00206598
- Volume :
- 64
- Issue :
- 2
- Database :
- Complementary Index
- Journal :
- International Economic Review
- Publication Type :
- Academic Journal
- Accession number :
- 163285032
- Full Text :
- https://doi.org/10.1111/iere.12620