Financing Constraints, Firm Dynamics, and International Trade

48 Pages Posted: 1 Jan 2013

See all articles by Till Gross

Till Gross

Carleton University

Stephane Verani

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: August 30, 2012


There is growing empirical support for the conjecture that access to credit is an important determinant of firms' export decisions. We study a multi-country general equilibrium economy in which entrepreneurs and lenders engage in long-term credit relationships. Financial constraints arise in consequence of financials contracts that are optimal given information asymmetry. Consistent with empirical regularities, as firm age and size increase, the model implies decreasing mean and variance of firm growth and increasing firm survival. Exporters are larger, their survival in international markets increases with the time spent exporting, and the sales of older exporters are larger and more stable.

Keywords: private information, private information, long-term lending contracts, exporter dynamics, international trade, financial intermediation

JEL Classification: F10, D82, L14

Suggested Citation

Gross, Till and Verani, Stephane, Financing Constraints, Firm Dynamics, and International Trade (August 30, 2012). FEDS Working Paper No. 2012-68, Available at SSRN: or

Till Gross

Carleton University ( email )

1125 colonel By Drive
Ottawa, Ontario K1S 5B6

Stephane Verani (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States


Do you want regular updates from SSRN on Twitter?

Paper statistics

Abstract Views
PlumX Metrics