Financial Barriers to Structural Change in Developing Economies: A Theoretical Framework

Created
Sat, 19/03/2022 - 06:39
Updated
Sat, 19/03/2022 - 06:39
Liabilities denominated in foreign currency have established a permanent role on emerging market firms' balance sheets, which implies that changes in both global liquidity conditions and in the value of the currency may have a long-lasting effect for them. In order to consider the financial conditions that may encourage (discourage) structural change in a small, open economy, we adopt the framework put forward by the "monetary theory of distribution" (MTD).