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Markets for Risk and Openness to Trade: How are they Related?

Author

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  • Svaleryd, Helena

    (Department of Economics)

  • Vlachos, Jonas

    (Dept. of Economics, Stockholm School of Economics)

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.

Suggested Citation

  • Svaleryd, Helena & Vlachos, Jonas, 1999. "Markets for Risk and Openness to Trade: How are they Related?," SSE/EFI Working Paper Series in Economics and Finance 327, Stockholm School of Economics, revised 28 Aug 2001.
    • Handle: RePEc:hhs:hastef:0327
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial markets; trade policy;

    JEL classification:

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

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