We study the role that cross-border firm-to-firm credit plays in financing exporters. Exploiting the exogenous shock of US tariffs on Chinese goods in 2018–2019, we examine the response of Colombian firms -- bystanders not targeted by trade policy -- to redirected US demand. Using credit registry information for cross-border and domestic non-financial firm financing, we find that almost 40 percent of the total credit sourced by exporters came from cross-border firm-to-firm credit at end-2019, which represented 80 percent of their cross-border credit. In contrast to traditional trade credit, which is typically short-term, firm-to-firm credit has an average maturity of almost 2 years, and has characteristics resembling bank lending. Our findings highlight an overlooked financial channel underpinning the international trade network.

A pandemic, trade frictions (e.g., tariff escalations), or nationalism can dial back global integration as much as advancements in IT and transportation can spur it. We study a parsimonious general equilibrium model of occupational choice, risk-taking, and income inequality against the backdrop of market (dis)integration and certain services in inelastic supply over the short run. In a decentralized, segmented environment, entrepreneurship and risk-taking are inefficiently low; in an integrated market, they can be socially excessive and entrepreneurship is non-monotone in the service supply. As transportation and information technologies improve, occupational risk-taking and total production increase, with ambiguous welfare consequences. In a dynamic setting with inter-generational inheritance, wealth inequality is exacerbated by income inequality, but faces a long-term reversal when total production helps increase service supply. Our findings are generally robust to endogenous service supply and various levels of scarcity.

Using establishment-level data and scanner-based retail prices, we show that the number of firms declines and local retail prices rise in counties affected by natural disasters. Price increases are particularly pronounced for essential goods and low-priced products, as well as in counties with fewer bank branches per capita, where fewer firms enter following natural disasters. The effects extend beyond retailers: large producers affected by natural disasters raise prices, especially when many of their competitors are also affected, while smaller producers do not. Consistent with these pricing patterns, large firms experience increases in sales and profits following natural disasters. Our results suggest that the costs of climate-related disasters, which are increasingly frequent negative realizations of physical risk, are ultimately borne by consumers, while large firms benefit from the redistribution of market shares.