A Gravity Model of Sovereign Lending: Trade, Default and Credit

FRB of San Francisco Working Paper No. 2002-09

20 Pages Posted: 10 May 2005

See all articles by Andrew Kenan Rose

Andrew Kenan Rose

University of California - Haas School of Business; NUS Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Mark M. Spiegel

Federal Reserve Bank of San Francisco - Economic Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: August 2002

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: Theory, empirical, panel, bilateral, bank, loan

JEL Classification: F15, F33

Suggested Citation

Rose, Andrew Kenan and Rose, Andrew Kenan and Spiegel, Mark M., A Gravity Model of Sovereign Lending: Trade, Default and Credit (August 2002). FRB of San Francisco Working Paper No. 2002-09, Available at SSRN: https://ssrn.com/abstract=721021 or http://dx.doi.org/10.2139/ssrn.721021

Andrew Kenan Rose (Contact Author)

University of California - Haas School of Business ( email )

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Mark M. Spiegel

Federal Reserve Bank of San Francisco - Economic Research Department ( email )

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