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Développement financier et ouverture au commerce

  • Peltrault, Frédéric
  • Blanchard, Michel
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    This paper proposes an international trade model under uncertainty in which international differences in financial development provide the basis for trade. When preferences exhibit risk vulnerability as defined by Gollier and Pratt [1996], financial development reduces individuals’ risk aversion. Hence, international differences in financial development can induce international differences in risk aversion. We show that all the individuals have the feeling that trade is welfare improving before the resolution of uncertainty. So, all individuals are in favour of free trade ex ante. But, the ex post welfare of the more risk averse country can decrease after the resolution of uncertainty. Contrary to the less risk averse country, the more risk averse country, with the less developed financial system, is likely to regret his decision in favour of free trade commitment.

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    File URL: http://basepub.dauphine.fr/xmlui/bitstream/123456789/96/1/Peltrault_CR_2007_05.pdf
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    Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/96.

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    Date of creation: 2007
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    Publication status: Published in Cahier de recherche EURISCO, 2007
    Handle: RePEc:dau:papers:123456789/96
    Contact details of provider: Web page: http://www.dauphine.fr/en/welcome.html

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    1. Judd, Kenneth L., 1985. "The law of large numbers with a continuum of IID random variables," Journal of Economic Theory, Elsevier, vol. 35(1), pages 19-25, February.
    2. Weil, P., 1991. "Equilibrium Asset Prices with Undiversifiable Labor Income Risk," Harvard Institute of Economic Research Working Papers 1564, Harvard - Institute of Economic Research.
    3. Monica Paiella & Luigi Guiso, 2004. "Risk Aversion, Wealth and Background Risk," 2004 Meeting Papers 525, Society for Economic Dynamics.
    4. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
    5. Frederic Peltrault & Michel Blanchard, 2004. "The welfare effects of international trade with optimistic and pessimistic managers," Economics Bulletin, AccessEcon, vol. 6(15), pages 1-10.
    6. Ross Levine, 2004. "Finance and Growth: Theory and Evidence," NBER Working Papers 10766, National Bureau of Economic Research, Inc.
    7. Michel Blanchard & Frédéric Peltrault, 2005. "Psychologie des entrepreneurs, localisation des activités innovantes et pertes à l'échange international," Revue économique, Presses de Sciences-Po, vol. 56(1), pages 127-145.
    8. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
    9. Shy, Oz, 1988. "A general equilibrium model of pareto inferior trade," Journal of International Economics, Elsevier, vol. 25(1-2), pages 143-154, August.
    10. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-48, August.
    11. Lucas, Robert Jr. & Prescott, Edward C., 1974. "Equilibrium search and unemployment," Journal of Economic Theory, Elsevier, vol. 7(2), pages 188-209, February.
    12. Gollier, Christian & Pratt, John W, 1996. "Risk Vulnerability and the Tempering Effect of Background Risk," Econometrica, Econometric Society, vol. 64(5), pages 1109-23, September.
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