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In the presence of credit constraints, temporary migration abroad provides an effective strategy for workers to accumulate savings to finance self-employment when they return home. This paper provides direct evidence of this link and its effects on workers' employment trajectories by using a new, large-scale survey of temporary migrants from Bangladesh. It constructs and estimates a dynamic model that establishes connections between asset accumulation and credit constraints, and, thus, between workers' migration and self-employment decisions. Interlinked impacts also emerge from simulations of three key policy interventions that target migration costs or domestic credit constraints for entrepreneurship. Lowering migration costs increases emigration, reduces the age at which workers depart, and reduces the duration of their time abroad, which together lead to higher savings and domestic self-employment. Reducing the interest rate for entrepreneurial loans reduces migration and savings levels, undercutting the positive effects on business creation at home. Correcting workers' inflated perceptions about overseas earnings potential reduces emigration rates and durations, triggering a decrease of both repatriated savings and self-employment in Bangladesh. The findings, which have implications for migrant-sending countries, highlight the need for policies to take into account the linkages between migration and self-employment decisions.

Access To Finance --- Credit Constraint --- Employment and Unemployment --- Entrepreneurship --- Labor Markets --- Migrant Labor --- Migration Costs --- Poverty Reduction --- Social Protections and Labor --- Temporary Migration

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Adverse shocks to rich countries often have a large and persistent negative impact on investment and output in developing countries. This paper examines a transmission mechanism that can account for this stylized fact. The mechanism is based on the existence of international financial frictions. Specifically, if a small, developing country has to collateralize its assets to borrow funds to invest, falling asset prices caused by a negative shock in an advanced economy worsen the developing country's collateral value and reduce its ability to borrow and reinvest. Hence, investment in the developing country declines, and international investors repatriate capital to the advanced country. As less capital now can be pledged as collateral, the developing country's credit constraint is further tightened, which leads to another round of decline in investment. This generates a downward spiral that may cause large output losses to the developing country. The mechanism finds empirical support in the 2008-2009 crisis data.

Asset prices --- Asset value --- Capital outflows --- Collateral --- Country Strategy & Performance --- Credit constraint --- Credit constraints --- Debt Markets --- Decline in investment --- Developing countries --- Developing country --- Economic Theory & Research --- Emerging Markets --- Emerging markets --- External debt --- Finance and Financial Sector Development --- Financial crisis --- Foreign banks --- International bank --- International financial institutions --- International financial statistics --- International investors --- Investment and Investment Climate --- Macroeconomics and Economic Growth --- Negative shock --- Output losses --- Private Sector Development --- Spot market