Interest Rates and World Trade: An "Austrian" Perspective
AbstractI develop a framework to study the interplay between world trade and interest rates. The model incorporates an explicit notion of time and production length, in the "Austrian" tradition of Bohm-Bawerk (1889). Changes in the interest rate affect production lengths, labor productivity, and the financial costs of exporting. I decompose the response of the volume of world trade to changes in the interest rate into four components: a labor productivity effect, a "propensity to consume out of labor income" effect, a "temporal dimension of variable trade costs" effect, and a "selection into exporting" effect.
CitationAntràs, Pol. 2023. "Interest Rates and World Trade: An "Austrian" Perspective." AEA Papers and Proceedings, 113: 65-69. DOI: 10.1257/pandp.20231026
- B53 Current Heterodox Approaches: Austrian
- D21 Firm Behavior: Theory
- E14 Austrian; Evolutionary; Institutional
- E43 Interest Rates: Determination, Term Structure, and Effects
- F11 Neoclassical Models of Trade