Essays on International Trade, Capital Flows and Financial Frictions

Two particular concerns in international economics motivate this research: I. How are real and financial activities related to each other in a globalized economy? II. What role do financial frictions play in this relationship? Three essays look at these questions from different perspectives. The...

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Autor Principal: López Forero, María Margarita
Formato: Trabajo de grado (Bachelor Thesis)
Lenguaje:Desconocido (Unknown)
Publicado: 2016
Materias:
Acceso en línea:http://babel.banrepcultural.org/cdm/ref/collection/p17054coll23/id/1152
id ir-p17054coll23-1152
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spelling ir-p17054coll23-11522020-09-29 Essays on International Trade, Capital Flows and Financial Frictions López Forero, María Margarita Two particular concerns in international economics motivate this research: I. How are real and financial activities related to each other in a globalized economy? II. What role do financial frictions play in this relationship? Three essays look at these questions from different perspectives. The first chapter revises the old question on the relation between FDI and exports on French firms, where theory seems to be at odds with empirical findings. Most FDI and most trade take place between rich markets, where theory predicts a substitutability relationship, while empirical studies have almost invariably found a complementarity relation. We develop a theoretical framework which allows reconciling this apparent empirical and theoretical mismatch and we bring new evidence on the substitutability effect, which takes place in the best performing products of the firm when in strong demand markets the investment is sufficiently large. The second chapter examines how external financial needs- measured at the sector level- and financial development at the country level interact to shape the aggregate marginal product of capital of a country (MPK) and its foreign direct investment inflows (FDI). Our findings imply that financial development seems to be a necessary condition -and certainly not a sufficient one- in order for production in financially dependent sectors to positively affect aggregate MPK and attract FDI in developing countries. This analysis contributes to explain the Lucas’ Paradox of why capitals don’t flow from rich to poor countries in the ways predicted by theory. The third chapter studies the transmission of global shocks during the Great Recession and its impact on French employment. Particularly, we explore the role of trade credit in the propagation of cross-border shocks. Our findings imply that strongly relying on trade credit made firms more vulnerable to unanticipated shocks, for which the adverse impact of the crisis was exacerbated. This effect intensified among firms with important sourcing ties with severely shocked countries, while the negative effect of the crisis was mitigated when sourcing relations with countries subject to milder shocks were stronger. Our contribution to the literature adds to the debate on the role of trade finance in explaining the real economic downturn across borders. International trade; Financial frictions; Capital flows; Globalization; Comercio internacional; Fricciones financieras; Flujos de capital; Globalización Ciencias sociales; Ciencias sociales / Economía; Ciencias sociales / Economía / Economía internacional 2016 PDF Tesis ENG - Inglés Colombia Colfuturo © Derechos reservados del autor http://babel.banrepcultural.org/cdm/ref/collection/p17054coll23/id/1152
institution Biblioteca Virtual Banco de la República - Colecciones digitales
collection Custom
language Desconocido (Unknown)
topic International trade; Financial frictions; Capital flows; Globalization; Comercio internacional; Fricciones financieras; Flujos de capital; Globalización
Ciencias sociales; Ciencias sociales / Economía; Ciencias sociales / Economía / Economía internacional
spellingShingle International trade; Financial frictions; Capital flows; Globalization; Comercio internacional; Fricciones financieras; Flujos de capital; Globalización
Ciencias sociales; Ciencias sociales / Economía; Ciencias sociales / Economía / Economía internacional
López Forero, María Margarita
Essays on International Trade, Capital Flows and Financial Frictions
description Two particular concerns in international economics motivate this research: I. How are real and financial activities related to each other in a globalized economy? II. What role do financial frictions play in this relationship? Three essays look at these questions from different perspectives. The first chapter revises the old question on the relation between FDI and exports on French firms, where theory seems to be at odds with empirical findings. Most FDI and most trade take place between rich markets, where theory predicts a substitutability relationship, while empirical studies have almost invariably found a complementarity relation. We develop a theoretical framework which allows reconciling this apparent empirical and theoretical mismatch and we bring new evidence on the substitutability effect, which takes place in the best performing products of the firm when in strong demand markets the investment is sufficiently large. The second chapter examines how external financial needs- measured at the sector level- and financial development at the country level interact to shape the aggregate marginal product of capital of a country (MPK) and its foreign direct investment inflows (FDI). Our findings imply that financial development seems to be a necessary condition -and certainly not a sufficient one- in order for production in financially dependent sectors to positively affect aggregate MPK and attract FDI in developing countries. This analysis contributes to explain the Lucas’ Paradox of why capitals don’t flow from rich to poor countries in the ways predicted by theory. The third chapter studies the transmission of global shocks during the Great Recession and its impact on French employment. Particularly, we explore the role of trade credit in the propagation of cross-border shocks. Our findings imply that strongly relying on trade credit made firms more vulnerable to unanticipated shocks, for which the adverse impact of the crisis was exacerbated. This effect intensified among firms with important sourcing ties with severely shocked countries, while the negative effect of the crisis was mitigated when sourcing relations with countries subject to milder shocks were stronger. Our contribution to the literature adds to the debate on the role of trade finance in explaining the real economic downturn across borders.
format Trabajo de grado (Bachelor Thesis)
author López Forero, María Margarita
author_facet López Forero, María Margarita
author_sort López Forero, María Margarita
title Essays on International Trade, Capital Flows and Financial Frictions
title_short Essays on International Trade, Capital Flows and Financial Frictions
title_full Essays on International Trade, Capital Flows and Financial Frictions
title_fullStr Essays on International Trade, Capital Flows and Financial Frictions
title_full_unstemmed Essays on International Trade, Capital Flows and Financial Frictions
title_sort essays on international trade, capital flows and financial frictions
publishDate 2016
url http://babel.banrepcultural.org/cdm/ref/collection/p17054coll23/id/1152
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score 11,391405