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Francesco Marchionne and Evelina Lazareva
''The limits to integration before and after the great financial crisis''
( 2019, Vol. 39 No.2 )
This paper examines the impact of different trade-enhancing factors on international trade before and after the financial crisis. Using a sample of 399,225 annual bilateral trade flows over the period 1988-2015, we test if cultural, institutional and geographical factors stimulate bilateral trade by applying a gravity equation model. The great financial crisis reinforced geographical factors and weakened institutional ones. Overall, cultural factors had a positive effect on trade overcompensating the smaller benefit of RTAs and common currencies. It suggests a potential efficient substitution effect between culture and institutions that is largely dominated by the larger negative impact of geographical factors.
Keywords: culture, financial crisis, geography, gravity, institutions
JEL: F1 - Trade: General
F3 - International Finance: General
Manuscript Received : Feb 05 2019 Manuscript Accepted : Apr 25 2019

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