This paper examines how China's exports are affected by exchange rate shocks from countries who supply intermediate inputs to China. We build a simple small open economy model with intermediate goods trade to show that due to the intraregional trade in intermediate goods, a devaluation of other...

Crony capitalism and self-fulfilling expectations by international creditors are often suggested as two rival explanations for currency crisis. This paper examines a possible linkage between the two that has so far not been explored: corruption may affect a country’s composition of capital...

Liquidity-constrained large shareholders often reallocate capital within business groups to finance their own projects, imposing credit constraints on other group members. Using microdata from Chinese customs, we study the impact of this negative externality on the transmission of exchange-rate...