TY - JOUR
T1 - Volatility, financial constraints, and trade
AU - García-Vega, M.
AU - Guariglia, A.
AU - Spaliara, M.-E.
N1 - Copyright 2011 Elsevier B.V., All rights reserved.
PY - 2012/1/1
Y1 - 2012/1/1
N2 - We construct a dynamic monopolistic competition model with heterogeneous firms to study the links between firms' earnings volatility, their degree of financial constraints, their survival probabilities, and their export market participation decisions. Our model predicts that more volatile firms are more likely to face financial constraints and to go bankrupt, need to be more productive to stay in the market, and have more incentives to start exporting. A further implication is that through market diversification, exports tend to stabilize firms' total sales. These predictions are supported by our empirical tests, which are based on a panel of 23,674 UK firms.
AB - We construct a dynamic monopolistic competition model with heterogeneous firms to study the links between firms' earnings volatility, their degree of financial constraints, their survival probabilities, and their export market participation decisions. Our model predicts that more volatile firms are more likely to face financial constraints and to go bankrupt, need to be more productive to stay in the market, and have more incentives to start exporting. A further implication is that through market diversification, exports tend to stabilize firms' total sales. These predictions are supported by our empirical tests, which are based on a panel of 23,674 UK firms.
UR - http://www.scopus.com/inward/record.url?partnerID=yv4JPVwI&eid=2-s2.0-79957829439&md5=1a72f03cbccb29f650c1366effaf4620
U2 - 10.1016/j.iref.2011.05.003
DO - 10.1016/j.iref.2011.05.003
M3 - Article
AN - SCOPUS:79957829439
SN - 1059-0560
VL - 21
SP - 57
EP - 76
JO - International Review of Economics and Finance
JF - International Review of Economics and Finance
IS - 1
ER -