A Gravity Model of International Lending: Trade, Default and Credit

Andrew Rose and Mark Spiegel

No 3539, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: One reason why countries service their external debts is the fear that default might lead to shrinkage of international trade. If so, then creditors should systematically lend more to countries with which they share closer trade links. We develop a simple theoretical model to capture this intuition, then test and corroborate this idea.

Keywords: Theory; Empirical; Panel; Bilateral; Bank; Loan (search for similar items in EconPapers)
JEL-codes: F13 F33 (search for similar items in EconPapers)
Date: 2002-09
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Citations: View citations in EconPapers (68)

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