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Title:	On the Role of Financial Frictions and the Saving Rate during Trade Liberalizations
Author:	Antras, Pol; Caballero, Richard J. Note: Order does not necessarily reflect citation order of authors.
Citation:	Antrás, Pol and Richard C. Caballero. 2010. On the role of financial frictions and the saving rate during trade liberalizations. Journal of the European Economic Association Papers and Proceedings 8(2-3): 442-455.
Full Text & Related Files:	Antras_FinancialFrictions.pdf (232.5Kb; PDF)
Abstract:	We study how financial frictions and the saving rate shape the long-run effects of trade liberalization on income, consumption and the distribution of wealth in financially underdeveloped economies. In our model, regardless of whether the capital account is open or not, trade liberalization reduces the share of wealth in the hands of entrepreneurs and may well reduce steady state consumption and income. Furthermore, trade opening is more likely to reduce steady-state consumption and output, the higher is the level of financial development. For economies with an open capital account, a higher saving rate also increases the likelihood that a trade liberalization leads to a reduction in steady-state consumption and output.
Published Version:	doi:10.1111/j.1542-4774.2010.tb00515.x
Terms of Use:	This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP
Citable link to this page:	http://nrs.harvard.edu/urn-3:HUL.InstRepos:4784027

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  Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University

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