| Abstract: |
This paper studies how relationship-specific learning affects the joint
dynamics of exports and trade finance. Using micro-level Chilean data, it
documents that new exporters initially rely on cash-in-advance payments and
gradually transition to providing trade credit as relationships mature, with
faster transitions in riskier destinations and for less experienced firms.
Motivated by this, the paper develops a general equilibrium trade model that
integrates learning about foreign demand and counterparty risk together with
firms’ endogenous export and trade finance choices. The model is used to
investigate the role of learning and risks in shaping export adjustments and
quantify the impact of shocks to the cost of trade finance on aggregate
exports. The analysis finds that the response to these shocks depends on the
riskiness of the destination and is amplified by the disruption of long-term
trading relationships. |