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| Francesco Marchionne and Evelina Lazareva |
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| ''The limits to integration before and after the great financial crisis'' |
| ( 2019, Vol. 39 No.2 ) |
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| 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. |
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| Keywords: culture, financial crisis, geography, gravity, institutions |
JEL: F1 - Trade: General
F3 - International Finance: General |
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| Manuscript Received : Feb 05 2019 | | Manuscript Accepted : Apr 25 2019 |
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