Credit Constraints, Firm Dynamics and the Transmission of External Financial Shocks

1989 to 2000, and analyze the effect of the 1994 crisis modeled as an unexpected increase in the risk free rate. The model predicts: (i) a real exchange rate depreciation, (ii) an increase in the debt burden, (ii) a drop in output, (iii) a large decline in investment, (iv) an increase in exports. These real effects are consistent with the evidence for the Mexican crisis.

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Year of publication:	2007
Authors:	Pratap, Sangeeta ; Urrutia, Carlos
Institutions:	Society for Economic Dynamics - SED

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Series:	2007 Meeting Papers.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series 2007 SED Meeting Papers Number 124
Source:	RePEc - Research Papers in Economics

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