The 149th meeting jointly organized with International Public Policy Seminar

The 149th meeting jointly organized with International Public Policy Seminar The Osaka Workshop on Economics of Institutions and Organizations, OEIO, meets every month to exchange research ideas on institutional and organizational economics. Participants include both people specialized in theoretical research and those in empirical research. Topics of meetings might be about microeconomic theory, macroeconomic theory, or economic history..., whatever on institutional and organizational economics.

Date: Friday, December 16, 2022 13:30 to 15:00

Place: Will be held online

Presenter: Ryoji Ohdoi, School of Economics, Kwansei Gakuin University

Title: "A heterogeneous-firm model of trade and growth with country-specific credit constraints"

Abstract: How does the international asymmetry in the degree of credit market imperfections affect patterns of trade, financial flows, and the growth rate? To investigate this issue in a unified framework, in this study we introduce financial frictions into an asymmetric two-country model of trade, growth, and firm heterogeneity. Owing to asymmetric countries, the market size for the tradable goods in each country is endogenously determined. Main results are summarized as follows. First, unilateral relaxation of credit constraints in one country enlarges the market size for the tradable goods in that country. Second, such a change in the market size facilitates elimination of unproductive firms even in the other country. Third, then, even unilateral relaxation of credit constraints increases the both countries' common long-run growth rate.