On the role of financial frictions and the saving rate during trade liberalizations
Name
Antras-2010-ON THE ROLE OF FINANCIAL FRICTIONS AND THE SAVING RATE DURING TRADE LIBERALIZATIONS.pdf
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207.77 KB
Format
Adobe PDF
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Author(s)
Caballero, Ricardo J.
Antras, Pol
Date Issued
April 2010
Journal
Journal of the European Economic Association
Publisher
MIT Press
Citation
Antràs, Pol, and Caballero, Ricardo J. (2010). On the role of financial frictions and the saving rate during trade liberalizations. Journal of the European Economic Association 8: 442-455. © 2010 European Economic Association
Version
Final published version
Abstract
We 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.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1162/jeea.2010.8.2-3.442
