We develop a heterogeneous-firms model with trade in goods, labor mobility and credit constraints due to moral hazard. Mitigating financial frictions reduces the incentive of high-skilled workers to migrate to one region such that an unequal distribution of industrial activity becomes less...

We develop a heterogeneous-firms model with trade in goods, labor mobility and credit constraints due to moral hazard. Mitigating financial frictions reduces the incentive of high-skilled workers to migrate to one region such that an unequal distribution of industrial activity becomes less...

We propose a stylized monopolistic competition model of international trade where firms differ with respect to the expected economic lifetime of their innovations. Upon entry, they receive a commonly observed signal which is updated over time. Jointly with partial irreversibility of investment,...

Growing empirical literature shows that financial constraints are reduce the chance of exporting, suggesting that financial constraints are an important determinant of international trade patterns. In this aspect, I develop a model of international trade based on new trade theory with financial...

This paper identifies a new source of gains from trade from asset heterogeneity among firms. Under financial frictions, a firm's capital rental is constrained by its own assets. We show that, with or without productivity heterogeneity, trade openness or liberalization will always force the least...

This paper incorporates credit constraints into a model of global sourcing and heterogeneous firms. Following Antras and Helpman (2004), heterogeneous firms decide whether to outsource or integrate input suppliers. Financing of fixed organizational costs requires borrowing with credit...

This paper finds that firms' trade credit, the financing provided by upstream input suppliers along the supply chain, plays an important role in determining firms' exportation. In a panel data set of manufacturing firms in 25 Eastern European and Central Asian countries between 2001 and 2007, we...

How do firms' financial constraints, which restrict their borrowing, dynamically impact exports? This paper finds that after controlling for the endogeneity of financial constraints, constrained firms are less likely to export, and relaxing financial constraints leads to an increase in exports....

We study a two-sector, two-period model with learning externalities in the modern sector and imperfectly integrated capital markets. We find that higher capital market integration lowers the requirements on the learning pattern necessary for free trade to lead to an equilibrium with maximal...

The recent financial crisis has focused attention on the relationship between access to finance and international trade, triggering a burgeoning segment of the literature evaluating this link empirically. We review the role of finance in international trade and the main theories connecting them....