Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Aug, 1969, Volume 37, Issue 3

The Determinants of Trade Credit in the U.S. Total Manufacturing Sector<408:TDOTCI>2.0.CO;2-9
p. 408-423

M. I. Nadiri

This paper estimates a model specifying the determinants of trade credit in the United States total manufacturing sector for the postwar period. Trade credit is considered as a selling expense, like advertising outlays. Its determinants are derived from a profit maximization model in which the price, volume of output, and the selling costs are all variables to be jointly determined. The opportunity or user cost of accounts receivable and accounts payable are specified and the response of these accounts as well as net trade credit to changes in various monetary decision variables is examined.

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