Exporters and credit constraints. A firm-level approach

By building a theoretical model and taking it to the data with two novel datasets, this paper analyses the interaction between credit constraints and exporting behaviour. Building a heterogeneous firms model of international trade with liquidity-constrained firms yields several predictions on the equilibrium relationships between productivity, credit constraints and exports that are then verified in the data. The main findings of the paper are that firms are more likely to be exporting if they enjoy higher productivity levels and lower credit constraints. Also, credit constraints are important in determining the extensive but not the intensive margin of trade in terms of destinations. This introduces a pecking order of trade. Finally, an exchange rate appreciation will cause existing exporters to reduce their exports, entry of credit-constrained potential exporters and exit of the least productive exportersCredit constraints, heterogeneous firms, margins of export, export destinations, exchange rates and trade

A Swing-State Theory of Trade Protection in the Electoral College

This paper develops an infinite-horizon, political agency model with a continuum of political districts, in which incumbent politicians can improve their re-election probability by attracting swing voters in key states through strategic trade protection. A unique equilibrium is shown to exist where incumbents build a reputation of protectionism through their policy decisions. We show that strategic trade protection is more likely when protectionist swing voters have a lead over free-trade supporters in states with relatively strong electoral competition that represent a larger proportion of Electoral College votes. US data is used to test the hypothesis that industrial concentration in swing and decisive states is an important determinant of trade protection of that industry. The empirical findings provide support for the theory and highlight an important, and previously overlooked, determinant of trade protection in the US Electoral College.Political Economy, Elections, Electoral College, Swing States, Trade Policy

Imports and Exports at the Level of the Firm : Evidence from Belgium

This paper explores a newly-available panel data set merging balance sheet and international trade transaction data for Belgium. Both imports and exports appear to be highly concentrated among few firms and seem to have become more so over time. Focusing on manufacturing, we find that facts previously reported in the literature for exports only actually apply to imports too. We note that the number of trading firms diminishes as the number of export destinations or import origins increases. The same is true if we consider the number of products traded. With regard to productivity differentials, firms that both import and export appear to be the most productive, followed, in descending order, by importers only, exporters only and non-traders. These results point to the presence of fixed costs not only of exporting, but also of importing and to a process of self-selection in both export and import markets. Also, the productivity advantage of exporters reported in the literature may be overstated because imports were not considered.imports, exports, productivity, firms

Imports and Exports at the Level of the Firm: Evidence from Belgium

This paper explores a newly-available panel data set merging balance sheet and international trade transaction data for Belgium. Both imports and exports appear to be highly concentrated among few firms and seem to have become more so over time. Focusing on manufacturing, we find that facts previously reported in the literature for exports only actually apply to imports too. We note that the number of trading firms diminishes as the number of export destinations or import origins increases. The same is true if we consider the number of products traded. With regard to productivity differentials, firms that both import and export appear to be the most productive, followed, in descending order, by importers only, exporters only and non-traders. These results point to the presence of fixed costs; not only of exporting, but also of importing and to a process of self-selection in both export and import markets. Also, the productivity advantage of exporters reported in the literature may be overstated because imports were not considered.exports, imports, productivity, firms

Imports and exports at the level of the firm: Evidence from Belgium

This paper explores a newly-available panel data set merging balance sheet and international trade transaction data for Belgium. Both imports and exports appear to be highly concentrated among few firms and seem to have become more so over time. Focusing on manufacturing, we find that facts previously reported in the literature for exports only actually apply to imports too. We note that the number of trading firms diminishes as the number of export destinations or import origins increases. The same is true if we consider the number of products traded. With regard to productivity differentials, firms that both import and export appear to be the most productive, followed, in descending order, by importers only, exporters only and non-traders. These results point to the presence of fixed costs; not only of exporting, but also of importing and to a process of self-selection in both export and import markets. Also, the productivity advantage of exporters reported in the literature may be overstated because imports were not considered.exports, imports, productivity, firms

The interaction between firms and governments in climate change and international trade

This thesis analyses interactions between firms and governments in climate change and international trade. First, a theory of international agreements on climate change is presented in which governments negotiate targets and firms bear the cost of emission reductions. It analyses the effect on negotiations of investment, on R&D for instance. The public good nature of the problem implies that investment improves the government’s bargaining position. Anticipating this effect on the Nash-bargained outcome will induce firms, surprisingly, to over-invest with respect to the second best. The second chapter explores a different area in which firms and governments interact: trade policy. This chapter analyses the incentives for trade protection in an electoral college setting by constructing a new multi jurisdictional political agency model. The introduction of a spatial factor shows how the distribution of swing voters across decisive, swing states affects trade policy incentives. The empirical analysis introduces a measure of how industries specialise geographically in swing and decisive states by augmenting a benchmark test of the "Protection for Sale" mechanism. The evidence provides support for the theory. A newly-available firm-level panel dataset for Belgium is described in the third chapter, in a bid to understand the patterns in the trade transaction data. The final chapter considers the determinants of firm exporting behaviour, in particular liquidity constraints. A heterogeneous �firms trade model shows how exporters in general, firms exporting to more destinations and to smaller markets, weighted by distance, are less likely to be credit-constrained. Finally, in the presence of liquidity constraints, the impact of exchange rates on trade flows is decomposed. These equilibrium relations hold in the Belgian data, measuring credit constraints with firm-year-level credit scores. This highlights the potential role of governments in determining, through their policies on credit constraints, the patterns of trade and hence productivity levels and overall welfare

Still time to Reclaim The European Union Emissions Trading System for the European Tax Payer

The criteria proposed by the EU Commission to identify industries that will receive free emission permits in the third phase of the European Union Emissions Trading System (EU ETS) are not restrictive enough. Evidence from interviews with almost 800 managers in Europe shows that most of the sectors entitled to free emission permits are not facing an increased risk of closure or relocation outside of the EU as a consequence of permit auctioning. Free permit allocation is therefore just a transfer of tax payers' money to industry without any additional social benefit. We propose a simple modification of the Commission's criteria for free permit allocation which could save European tax payers at least €7 billion annually.Environment

Europe's emissions trading scheme: taxpayers versus sthe industry lobby

The European Commission plans to tighten the greenhouse gas emissions targets in the Emissions Trading System. Ralf Martin and colleagues examine the likely impact on affected businesses, and conclude that industry is exploiting concerns about competitiveness to obtain free emission permits according to criteria that are too lax.industry, R&D, carbon policy, carbon trading

The impact of the EU ETS on regulated firms: what is the evidence after ten years?

This article reviews the recent literature on ex-post evaluation of the impacts of the European Union Emissions Trading Scheme (EU ETS)on regulated firms in the industrial and power sectors. We summarize the findings from original research papers concerning three broadly defined impacts: CO2 emissions, economic performance and competitiveness, and innovation. We conclude by highlighting gaps in the current literature and suggesting priorities for future research on this landmark policy

The Impact of the European Union Emissions Trading Scheme on Regulated Firms: What Is the Evidence after Ten Years?

This article reviews the recent literature on ex post evaluation of the impacts of the European Union (EU) Emissions Trading Scheme (ETS) on regulated firms in the industrial and power sectors. We summarize the findings from original research papers concerning three broadly defined impacts: carbon dioxide emissions, economic performance and competitiveness, and innovation. We conclude by highlighting gaps in the current literature and suggesting priorities for future research on this landmark policy.We gratefully acknowledge financial support from DECC, the ESRC (grant ES/ J006742/1), the British Academy (Martin), the Leverhulme Trust (Muuˆ ls), and the SpanishMinistries of Science and Innovation, and Economics and Competitiveness, reference numbers SEJ2007 62908, ECO2012 31358 and RYC 2013 12492 (Wagner)