Trade, finance and endogenous firm heterogeneity

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• dc.contributor.author Bonfiglioli, Alessandra
• dc.contributor.author Crinò, Rosario
• dc.contributor.author Gancia, Gino A.
• dc.date.accessioned 2021-04-26T07:53:50Z
• dc.date.available 2021-04-26T07:53:50Z
• dc.date.issued 2019
• dc.description.abstract We study how financial frictions affect firm-level heterogeneity and trade. We build a model in which productivity differences across monopolistically competitive firms are endogenous and depend on investment decisions at the entry stage. By increasing entry costs, financial frictions lower the exit cutoff and hence the value of investing in bigger projects with more dispersed outcomes. As a result, financial frictions make firms smaller and more homogeneous, and hinder the volume of exports. Export opportunities, instead, shift expected profits to the tail and increase the value of technological heterogeneity. We test these predictions using comparable measures of sales dispersion within 365 manufacturing industries in 119 countries, built from highly disaggregated US import data. Consistent with the model, financial development increases sales dispersion, especially in more financially vulnerable industries; sales dispersion is also increasing in measures of comparative advantage. These results help explaining the effect of financial development and factor endowments on export sales.en
• dc.description.sponsorship We acknowledge financial support from the Barcelona GSE, the Spanish Ministry of Economy, and Competitiveness (ECO2014-55555-P and ECO2014-59805-P), and the Catalan AGAUR (2014-SGR-546).
• dc.format.mimetype application/pdf
• dc.identifier.citation Bonfiglioli A, Crinò R, Gancia G. Trade, finance and endogenous firm heterogeneity. J Eur Econ Assoc. 2018 Jan 5;17(1):79-130. DOI: 10.1093/jeea/jvx047
• dc.identifier.doi http://dx.doi.org/10.1093/jeea/jvx047
• dc.identifier.issn 1542-4766
• dc.identifier.uri http://hdl.handle.net/10230/47196
• dc.language.iso eng
• dc.publisher Oxford University Press
• dc.relation.ispartof Journal of the European Economic Association. 2018 Jan 5;17(1):79-130
• dc.relation.projectID info:eu-repo/grantAgreement/ES/1PE/ECO2014-55555-P
• dc.relation.projectID info:eu-repo/grantAgreement/ES/1PE/ECO2014-59805-P
• dc.rights © Oxford University Press. This is a pre-copyedited, author-produced version of an article accepted for publication in Journal of the European Economic Association following peer review. The version of record Bonfiglioli A, Crinò R, Gancia G. Trade, finance and endogenous firm heterogeneity. Journal of the European Economic Association. 2019 Feb;17(1):79-130. DOI: 10.1093/jeea/jvx047 is available online at: https://academic.oup.com/jeea/article/17/1/79/4791178
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.subject.keyword Financial developmenten
• dc.subject.keyword Firm heterogeneityen
• dc.subject.keyword International tradeen
• dc.title Trade, finance and endogenous firm heterogeneityen
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/acceptedVersion