Although the trade literature does not suggest that increasing the share of credit-constrained consumers is an implication of increased trade integration, it can serve as a crude proxy for increased income dispersion and yield a preliminary insight into the matter.
To study the effects of rising cross-border integration then, we compare a base version of the model with a version featuring five changes to the model structure. These changes reflect the conjectures of the preceding section and are as follows: 1. A lower exchange rate elasticity of non-commodity export demand 2.