This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. AEA Papers and Proceedings
  4. May 2023
  5. Interest Rates and World Trade: An "Austrian" Perspective

Interest Rates and World Trade: An "Austrian" Perspective

  • Pol Antràs
AEA Papers and Proceedings
vol. 113, May 2023
(pp. 65-69)
Download Full Text PDF

Abstract

I 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.

Citation

Antràs, Pol. 2023. "Interest Rates and World Trade: An "Austrian" Perspective." AEA Papers and Proceedings, 113: 65-69. DOI: 10.1257/pandp.20231026

Additional Materials

JEL Classification

  • 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