Gains from Trade and the Sovereign Bond Market
Ken Kikkawa and
MPRA Paper from University Library of Munich, Germany
Increasing international flows of goods, services, and financial assets have been shown to increase a country's welfare through various channels. This paper studies the interaction between a country's welfare gains from international trade and its sovereign’s access to bond markets. We do so by incorporating a sovereign bond market into a simple Armington (1969)'s trade model. While standard trade models suggest surprisingly small gains from trade, our model implies that introducing channels through a sovereign bond market greatly magnifies the gains from trade.
Keywords: Gains from trade; Sovereign debt; Sovereign default; Trade openness (search for similar items in EconPapers)
JEL-codes: F14 F15 F60 (search for similar items in EconPapers)
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Working Paper: Gains from Trade and the Sovereign Bond Market (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:90685
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