We analyse firms' sourcing decisions under institutional uncertainty in foreign countries. Firms can reduce their uncertainty by observing offshoring firms' behaviour. The model characterises a sequential offshoring equilibrium path, led by the most productive firms in the market. With multiple...

In a globalised world, the volume of international trade is based on both import and export prices, thereby making a country's economy highly dependent on exchange rates. In order to study exchange rate movements, one frequently exploits the so-called Dornbusch overshooting model. However, the...

Recent research has found the language sentiment in financial news to be a substantial driver of prices in financial markets, though there are two diametrically opposed interpretations for this: either markets perceive news sentiment as fundamental information (thus leading to changes in the...

In this paper, extending the framework originally put forward by Greenwaldand Stiglitz (1988, 1990, 1993), we have developed a theoretical framework in which the financial conditions affect the capital accumulation decisions of the firm. In contrast to Greenwald and Stiglitz we allow for an...

In macroeconomic models with financial constraints (see, for instance, Greenwald and Stiglitz, 1993; Bernanke, Gertler and Gilchrist,1998; Kiyotaki and Moore,1997) firms' supply decisions depend upon the degree of financial robustness/fragility, which is identifed and measured in different ways. In the...