TY  - JOUR
A1  - Clemens, Christiane
A1  - Heinemann, Maik
T1  - The effects of international financial integration in a model with heterogeneous firms and credit frictions
JF  - Macroeconomic Dynamics
N2  - This paper examines the consequences of international financial integration in a two-sector standard incomplete markets model with occupational choice under risk and financial constraints affecting entrepreneurial activity. We endogenize international productivity differences and discuss the implications of international integration for the macroeconomy, inequality, and welfare. Lending countries are characterized by tighter domestic constraints and experience an increase in gross national product, whereas the gross domestic product effect is ambiguous. We conclude that international integration is beneficial only for economies where there are substantial financial constraints on entrepreneurial activity. Otherwise, a majority of households suffer, due to the unequal distribution of welfare gains and losses across the heterogeneous population.
KW  - Financial Constraints
KW  - International Capital Flows
KW  - Heterogeneous Agents
KW  - Occupational Choice
Y1  - 2018
U6  - https://doi.org/10.1017/S1365100517000979
SN  - 1365-1005
SN  - 1469-8056
VL  - 23
IS  - 7
SP  - 2815
EP  - 2844
PB  - Cambridge Univ. Press
CY  - New York
ER  -