Template-Type: ReDIF-Paper 1.0

Author-Name: Michael Pflüger
Author-X-Name-First: Michael 
Author-X-Name-Last: Pflüger

Author-Name: Stephan Russek
Author-X-Name-First: Stephan 
Author-X-Name-Last: Russek

Title: Business Conditions and Default Risks Across Countries

	
Abstract: The risk of default that business firms face is very significant and differs widely across
countries. This paper explores the links between countries’ business conditions and international
trade embedment and the default risk at the country level from a theoretical point of view. Our
main contribution is to set up a general equilibrium model which allows us to derive sharp
predictions concerning how key factors which shape a country’s business and trade environment
impact on the default risk of firms which operate in these environments. The predictions are in
accord with readily available data.
Length:  29 pages
Creation-Date:  2011-04
File-URL: http://www.bgpe.de/texte/DP/098_PfluegerRussek.pdf
File-Format: Application/pdf
File-Function: First version, 2011
Number: 098
Classification-JEL: F12, F13, F15, L25
Keywords: firm death, firm heterogeneity, business conditions and firm productivity, trade integration
Handle: RePEc:bav:wpaper:098_PfluegerRussek