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Academic Papers Artículo en revista académica

Financial Frictions and Export Dynamics in Large Devaluations

  • person David Kohn

    Fernando Leibovici; Michal Szkup

  • class Journal of International Economics. January 2020. Vol. 122

Abstract: We study the role of financial frictions and balance-sheet effects in accounting for the dynamics of aggregate exports, output, and investment in large devaluations. We investigate a small open economy with heterogeneous firms and endogenous export decisions, in which firms face financing constraints and debt can be denominated in foreign units. We find that these channels can explain only a small fraction of the dynamics of exports observed in the data since financially-constrained exporters increase exports by reallocating sales across markets. We show analytically the role of this mechanism on exports adjustment and document its importance using plant-level data.