Scandinavian Working Papers in Economics
Research Papers in Economics,
Stockholm University, Department of Economics
No 2000:11: Does Financial Development Lead to Trade Liberalization?
Helena Svaleryd and Jonas Vlachos ()
Additional contact information
Helena Svaleryd: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Jonas Vlachos: Department of Economics, Stockholm School of Economics, Postal: Department of Economics, Stockholm School of Economics, Box 6501, S-113 83 Stockholm, Sweden
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
reducing risk can facilitate liberal trade policy. Our results reveal a robust positive relationship between
openness to trade and the development of domestic and international financial markets.
Keywords: Financial markets; Trade policy; Panel data
35 pages, September 10, 2000
Full text files
wp00_11.pdf
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