ABSTRACT
This chapter aims to build time to ship into a model of heterogeneous firms obtaining working-capital loans from a bank, to see whether exports are indeed treated differently from domestic sales in theory. The credit constraint is more stringent as a firm’s export share grows, as the time to ship for exports is lengthened, and as there is greater dispersion of firms’ productivities reflecting information incompleteness. The chapter aims to estimate the export share with a Type-II Tobit model, or Heckman procedure, using the exogenous variables Zjt that include xjt. The use of firm-level indicators allows the cross-sectional differences between firms to be preserved in the predicted value obtained from preliminary regression. Firm productivity does not have any significant impact on foreign firms’ export decision. G. L. Clementi and H. A. Hopenhayn characterize incentive-compatible credit constraints in a dynamic model, and show how such constraints affect firm’s growth and survival.
