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This paper studies the relationship between access to credit, demand shocks, and export market adjustments using firm-level panel survey data for 24 economies in the Eastern Europe and Central Asian region. The study finds that domestic shocks to demand have a significant influence on the firm's decision to participate in international markets (extensive margin) and on the firm's share of foreign sales (intensive margin). Foreign shocks to demand only affect the firm's share of foreign sales. Conversely, the role of financial constraints on either the extensive or the intensive margin is more nuanced. The results are robust to various specifications of financial constraints and different estimation methods.

Credit Constraints --- Export Margins --- Heterogeneous Firms

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How large are the estimated gains from trade from a reduction in trade costs in the heterogeneous firms Melitz (M) model compared with the Armington (A) and Krugman (K) models? Surprisingly little is known beyond the one-sector model. This paper analyzes this question using a global trade model that contains ten regions and various numbers of sectors (1-10). Following Arkolakis and others (2012), the analysis holds the local trade response constant across the model comparisons based on a structural gravity estimate. Various model features and scenarios are introduced that are important to real economies, almost none of which has been examined across the three market structures with a constant trade response. In response to global reductions in iceberg trade costs, in all the multi-sector models, the ranking of global welfare gains is Melitz < Krugman < Armington; and the Krugman model captures between 75 and 95 percent on the additional gains above the Armington model that are estimated by the Melitz model. However, for individual regions, there are numerous cases of reversed welfare rankings. id est, Melitz < Krugman < Armington. For unilateral increases in tariffs, welfare gains are typically estimated with the Armington model, but welfare losses with monopolistic competition models. The paper constructs a multi-sector Feenstra ratio for the Dixit-Stiglitz variety externality and calculates changes in the terms-of-trade. These parameters provide economically intuitive explanations of the general pattern of results and exceptions. The paper concludes that gains from the reduction of trade costs for the world are: Melitz > Krugman > Armington. For individual regions, however, the welfare ranking of the Armington, Krugman and Melitz market structures is model, data, parameter and scenario dependent. The results highlight the need for data and structural considerations in policy analysis.

Gains From Trade --- Heterogeneous Firms --- International Economics & Trade --- International Trade and Trade Rules --- Labor Markets --- Monopolistic Competition --- Social Protections and Labor --- Structural Gravity --- Trade & Services --- Variety Measure

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This paper examines the extent to which the destination of exports matters for the input prices paid by firms, using detailed customs and firm-product-level data from Portugal. The authors use exchange rate movements as a source of variation in export destinations and find that exporting to richer countries leads firms to charge more for outputs and pay higher prices for inputs, other things equal. The results are supportive of the hypothesis that an exogenous increase in average destination income leads firms to raise the average quality of goods they produce and to purchase higher-quality inputs.

Access to Markets --- Debt Markets --- Economic Theory & Research --- Emerging Markets --- Export Destinations --- Finance and Financial Sector Development --- Heterogeneous Firms --- International Economics & Trade --- Macroeconomics and Economic Growth --- Markets & Market Access --- Private Sector Development --- Product Prices