Working Paper: NBER ID: w9285
Authors: Andrew K. Rose; Mark M. Spiegel
Abstract: One reason why countries service their external debts is the fear that default might lead to shrinkage of international trade. If so, then creditors should systematically lend more to countries with which they share closer trade links. We develop a simple theoretical model to capture this intuition, then test and corroborate this idea.
Keywords: No keywords provided
JEL Codes: F15; F33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fear of default (G33) | maintenance of debt obligations (H63) |
| bilateral trade (F10) | bilateral lending patterns (F34) |
| stronger trade ties (F19) | more lending from creditors (G21) |