Political Risk and Export Promotion: Evidence from Germany
Political risk represents an important hidden transaction cost that reduces international trade. This paper investigates the claim that public export credit guarantees mitigate this friction to trade flows and hence promote exports. We employ an empirical trade gravity model, where we explicitly control for political risk in the importing country in order to evaluate the effect of export guarantees. Using a novel data set on guarantees, we estimate the effect of guarantees in a static and dynamic panel model. We find a statistically and economically significant positive effect of public export guarantees on exports which indicates that export promotion is indeed effective. Furthermore, political risk turns out to be an important obstacle for exports and hence should be taken into account in any empirical model of trade. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 31 (2008)
Issue (Month): 6 (06)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0378-5920|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dixit, Avinash K, 1989.
"Entry and Exit Decisions under Uncertainty,"
Journal of Political Economy,
University of Chicago Press, vol. 97(3), pages 620-38, June.
- Portes, Richard & Rey, Hélène, 1999.
"The Determinants of Cross-Border Equity Flows,"
CEPR Discussion Papers
2225, C.E.P.R. Discussion Papers.
- R Portes & H Rey, 2000. "The Determinants Of Cross-Border Equity Flows," CEP Discussion Papers dp0446, Centre for Economic Performance, LSE.
- Richard Portes & Helene Rey, 1999. "The Determinants of Cross-Border Equity Flows," NBER Working Papers 7336, National Bureau of Economic Research, Inc.
- Richard Portes & Hélène Rey, 2001. "The Determinants of Cross-Border Equity Flows," DELTA Working Papers 2001-08, DELTA (Ecole normale supérieure).
- Richard Portes & Helene Rey, 2000. "The determinants of cross-border equity flows," LSE Research Online Documents on Economics 20203, London School of Economics and Political Science, LSE Library.
- Blundell, R. & Bond, S., 1995.
"Initial Conditions and Moment Restrictions in Dynamic Panel Data Models,"
104, Economics Group, Nuffield College, University of Oxford.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- Rose, Andrew K, 2002.
"Do We Really Know that the WTO Increases Trade?,"
CEPR Discussion Papers
3538, C.E.P.R. Discussion Papers.
- Andrew K. Rose, 2005.
"The Foreign Service and Foreign Trade: Embassies as Export Promotion,"
NBER Working Papers
11111, National Bureau of Economic Research, Inc.
- Andrew K. Rose, 2007. "The Foreign Service and Foreign Trade: Embassies as Export Promotion," The World Economy, Wiley Blackwell, vol. 30(1), pages 22-38, 01.
- Rose, Andrew K, 2005. "The Foreign Service and Foreign Trade: Embassies as Export Promotion," CEPR Discussion Papers 4953, C.E.P.R. Discussion Papers.
- Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, June.
- Rienstra-Munnicha, Paul & Turvey, Calum G., 2002. "The Relationship Between Exports, Credit Risk And Credit Guarantees," 2002 Annual meeting, July 28-31, Long Beach, CA 19583, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Pierre-Guillaume Méon & Khalid Sekkat, 2004.
"Does the quality of institutions limit the MENA's integration in the world economy?,"
ULB Institutional Repository
2013/164576, ULB -- Universite Libre de Bruxelles.
- Pierre-Guillaume Méon & Khalid Sekkat, 2004. "Does the Quality of Institutions Limit the MENA's Integration in the World Economy?," The World Economy, Wiley Blackwell, vol. 27(9), pages 1475-1498, 09.
- Rienstra-Munnicha, Paul & Turvey, Calum G., 2002. "The Relationship Between Exports, Credit Risk And Credit Guarantees," Working Papers 34115, University of Guelph, Department of Food, Agricultural and Resource Economics.
- Funatsu, Hideki, 1986. "Export Credit Insurance and Moral Hazard," 商学討究 (Shogaku Tokyu), Otaru University of Commerce, vol. 36(3), pages 217-235.
- Andrew B. Bernard & J. Bradford Jensen, 2001.
"Why Some Firms Export,"
NBER Working Papers
8349, National Bureau of Economic Research, Inc.
- Elhanan Helpman, 1999.
"The Structure of Foreign Trade,"
Journal of Economic Perspectives,
American Economic Association, vol. 13(2), pages 121-144, Spring.
- Helpman, E., 1998. "The Structure of Foreign Trade," Papers 18-98, Tel Aviv.
- Elhanan Helpman, 1998. "The Structure of Foreign Trade," Harvard Institute of Economic Research Working Papers 1848, Harvard - Institute of Economic Research.
- Helpman, Elhanan, 1998. "The Structure of Foreign Trade," CEPR Discussion Papers 2020, C.E.P.R. Discussion Papers.
- Elhanan Helpman, 1998. "The Structure of Foreign Trade," NBER Working Papers 6752, National Bureau of Economic Research, Inc.
- Dewit, Gerda, 2001. "Intervention in risky export markets: insurance, strategic action or aid?," European Journal of Political Economy, Elsevier, vol. 17(3), pages 575-592, September.
- Salvador Gil & Rafael Llorca & José A. Martínez Serrano, 2008. "Measuring the impact of regional export promotion: The Spanish case," Papers in Regional Science, Wiley Blackwell, vol. 87(1), pages 139-146, 03.
- Filip Abraham & Gerda Dewit, 2000. "Export Promotion Via Official Export Insurance," Open Economies Review, Springer, vol. 11(1), pages 5-26, January.
- Andrew B. Bernard & Joachim Wagner, 1998.
"Export Entry and Exit by German Firms,"
NBER Working Papers
6538, National Bureau of Economic Research, Inc.
- Andrew Bernard & Joachim Wagner, 2001. "Export entry and exit by German firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 137(1), pages 105-123, March.
- Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
- repec:dgr:rugsom:03f07 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:31:y:2008:i:6:p:781-803. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.