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The limits to integration before and after the great financial crisis

Author

Listed:
  • Francesco Marchionne

    (Indiana University)

  • Evelina Lazareva

    (University of Nottingham)

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.

Suggested Citation

  • Francesco Marchionne & Evelina Lazareva, 2019. "The limits to integration before and after the great financial crisis," Economics Bulletin, AccessEcon, vol. 39(2), pages 838-844.
    • Handle: RePEc:ebl:ecbull:eb-19-00114
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    culture; financial crisis; geography; gravity; institutions;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F3 - International Economics - - International Finance

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