The limits to integration before and after the great financial crisis

Francesco Marchionne () and Evelina Lazareva ()
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Evelina Lazareva: University of Nottingham

Economics Bulletin, 2019, vol. 39, issue 2, 838-844

Abstract: This paper examines the impact of different trade-enhancing factors on international trade before and after the financial crisis. Using a sample of 399,225 annual bilateral trade flows over the period 1988-2015, we test if cultural, institutional and geographical factors stimulate bilateral trade by applying a gravity equation model. The great financial crisis reinforced geographical factors and weakened institutional ones. Overall, cultural factors had a positive effect on trade overcompensating the smaller benefit of RTAs and common currencies. It suggests a potential efficient substitution effect between culture and institutions that is largely dominated by the larger negative impact of geographical factors.

Keywords: culture; financial crisis; geography; gravity; institutions (search for similar items in EconPapers)
JEL-codes: F1 F3 (search for similar items in EconPapers)
Date: 2019-04-25
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