Does economic policy uncertainty impact global value chain participation of Indian firms? The role of financial constraints

IF 4.7 2区经济学 Q1 ECONOMICS

Economic Modelling Pub Date : 2025-07-22 DOI:10.1016/j.econmod.2025.107243

Ketan Reddy , Subash Sasidharan , Shandre Mugan Thangavelu

引用次数: 0

Abstract

This study investigates the impact of economic policy uncertainty (EPU) on global value chain (GVC) participation of Indian manufacturing firms. Using firm-level panel data from India spanning 2004–2021, we estimate a probit model and address endogeneity concerns using an instrumental variable approach. Our analysis reveals that higher economic policy uncertainty leads to a decline in firms' GVC participation. The adverse effects of EPU translate via the financial constraints channel with high-leverage and low-liquidity firms experiencing a greater impact of EPU on their GVC integration. Moreover, we find that firms with access to trade credit can mitigate the adverse impact of EPU. In addition, using survival analysis, we also demonstrate that higher EPU is associated with greater exit rates among GVC firms.

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经济政策的不确定性是否会影响印度企业参与全球价值链？财政约束的作用

本研究探讨经济政策不确定性（EPU）对印度制造业企业参与全球价值链的影响。利用2004-2021年印度企业层面的面板数据，我们估计了probit模型，并使用工具变量方法解决了内生性问题。我们的分析表明，较高的经济政策不确定性导致企业参与全球价值链的下降。货币政策的不利影响通过金融约束渠道转化，高杠杆和低流动性企业对其全球价值链整合的影响更大。此外，我们发现，获得贸易信贷的企业可以减轻EPU的不利影响。此外，通过生存分析，我们还证明了较高的EPU与较高的GVC企业退出率相关。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Economic Modelling ECONOMICS-

CiteScore

8.00

自引率

10.60%

发文量

295

期刊介绍： Economic Modelling fills a major gap in the economics literature, providing a single source of both theoretical and applied papers on economic modelling. The journal prime objective is to provide an international review of the state-of-the-art in economic modelling. Economic Modelling publishes the complete versions of many large-scale models of industrially advanced economies which have been developed for policy analysis. Examples are the Bank of England Model and the US Federal Reserve Board Model which had hitherto been unpublished. As individual models are revised and updated, the journal publishes subsequent papers dealing with these revisions, so keeping its readers as up to date as possible.