Research Papers in Economics, Department of Economics, Stockholm University
Helena Svaleryd and Jonas Vlachos
Does Financial Development Lead to Trade Liberalization?
Abstract: It has long been argued that trade restrictions can be
motivated by insurance considerations in the absence of full risk
diversification. Recent theoretical research suggests that markets for risk
can alleviate resistance to reform and protectionist lobby group pressure.
We empirically address the hypothesis that institutions
can facilitate liberal trade policy. Our results reveal a robust positive
openness to trade and the development of domestic
and international financial markets.
Keywords: Financial markets; Trade policy; Panel data; (follow links to similar papers)
JEL-Codes: F13; G20; (follow links to similar papers)
35 pages, September 10, 2000
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