TY  - BOOK
AU  - Taylor,Ashley
AU  - Taylor,Ashley
TI  - Trade and Financial Sector Reforms: Interactions and Spillovers 
PY  - 2010///
CY  - Washington, D.C.
PB  - The World Bank
KW  - Access to Finance
KW  - Agency problems
KW  - Average productivity
KW  - Debt Markets
KW  - Economic Theory & Research
KW  - Emerging Markets
KW  - Equilibrium
KW  - Exports
KW  - Finance and Financial Sector Development
KW  - Financial Sector
KW  - Industrial economies
KW  - International trade
KW  - Labor Policies
KW  - Liquidity
KW  - Macroeconomics and Economic Growth
KW  - Marginal benefits
KW  - Marginal products
KW  - Political economy
KW  - Positive effects
KW  - Private Sector Development
KW  - Productivity
KW  - Social Protections and Labor
KW  - Total factor productivity
KW  - Trade liberalization
KW  - Trade policy
KW  - Trade reforms
KW  - Transition economies
KW  - Value added
KW  - Wages
N2  - The allocation of production across firms is a potentially important explanation of the productivity gap between rich and poor economies. Reforms to trade policy and the domestic financial sector are often both key elements of policy packages aimed at reducing productive distortions. However, the impact of each reform in reallocating production within an economy is usually analyzed independently. This paper asks how do such general equilibrium effects of trade and domestic financial sector reforms interact in terms of their effects on productivity, wages and utility. Motivated by recent firm-level studies, I add two-way linkages between firms' production and exporting decisions and their financial constraints to a general equilibrium heterogeneous firm trade model. The interaction effects between reforms appear qualitatively important. Trade and domestic financial sector reforms have complementary effects on the average productivity and size of domestic producers. However, if much reallocative work has already been done through a well-functioning financial sector, the marginal benefits of trade liberalisation for wages and household utility are reduced. Improvements in the ability to use exports as pledgeable collateral enhance both the wage and productivity effects of trade reforms. The model also highlights the potential for financial sector reforms in one economy to be exported via the trade channel, affecting decisions to produce or export in the foreign economy and putting downward pressure on foreign real wages
UR  - http://elibrary.worldbank.org/doi/book/10.1596/1813-9450-5279
ER  -