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dc.contributor.authorFelbermayr, Gabriel J.en_US
dc.contributor.authorSpiegel, Gilberten_US
dc.date.accessioned2012-08-06en_US
dc.date.accessioned2012-08-20T10:36:38Z-
dc.date.available2012-08-20T10:36:38Z-
dc.date.issued2012en_US
dc.identifier.urihttp://hdl.handle.net/10419/60992-
dc.description.abstractWe 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, this generates heterogeneity in effective discount rates and, thus, in the cost of finance. In line with evidence, the model predicts a negative correlation between firms' financing costs and their age. Over a firm's life-cycle, per period net profits and the export participation probability grow. Exporters are less likely to exit than purely domestic firms. Belief updating entails excessive financing of incumbents relative to entrants and too much exporting. Asymptotically, trade liberalization reduces overall general equilibrium exit rates, but it does not necessarily increase welfare. With multiple asymmetric export markets, firms gradually expand their market coverage and total sales. A confidence crisis modeled by belief reversion causes an over-proportional decrease in exports, thereby offering a novel interpretation of the recent trade slump.en_US
dc.language.isoengen_US
dc.publisherCESifo Münchenen_US
dc.relation.ispartofseriesCESifo Working Paper: Trade Policy 3873en_US
dc.subject.jelF12en_US
dc.subject.jelF36en_US
dc.subject.ddc330en_US
dc.subject.keywordinternational tradeen_US
dc.subject.keywordmonopolistic competitionen_US
dc.subject.keywordheterogeneous firmsen_US
dc.subject.keywordheterogeneous fixed costsen_US
dc.subject.keywordBayesian updatingen_US
dc.subject.stwAußenwirtschaftstheorieen_US
dc.subject.stwMonopolistischer Wettbewerben_US
dc.subject.stwKapitalkostenen_US
dc.subject.stwMarkteintritten_US
dc.subject.stwLebenszyklusen_US
dc.subject.stwTheorieen_US
dc.titleA simple theory of trade, finance, and firm dynamicsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn720687632en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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