Does Financial Development Lead to Trade Liberalization?

Helena Svaleryd and Jonas Vlachos

No 2000:11, Research Papers in Economics from Stockholm University, Department of Economics

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 (search for similar items in EconPapers)
JEL-codes: F13 G20 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2000-09-10
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sunrpe:2000_0011

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