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Markets for risk and openness to trade: how are they related?

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  • Svaleryd, Helena
  • Vlachos, Jonas

Abstract

It has long been argued that trade restrictions can be motivated by insurance considerations in the absence of full risk diversification. Recent literature suggests that markets for risk can alleviate resistance to reform and protectionist lobby group pressure. We empirically address the hypothesis that institutions which affect domestic risk reduction can facilitate liberal trade policy and show that there exists a robust positive relationship between openness to trade and the development of financial markets.
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  • Svaleryd, Helena & Vlachos, Jonas, 2002. "Markets for risk and openness to trade: how are they related?," Journal of International Economics, Elsevier, vol. 57(2), pages 369-395, August.
    • Handle: RePEc:eee:inecon:v:57:y:2002:i:2:p:369-395
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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