Working Paper
Non-Economic Engagement and International Exchange: The Case of Environmental Treaties
Abstract: We examine the role of non-economic partnerships in promoting international economic exchange. Since far-sighted countries are more willing to join costly international partnerships such as environmental treaties, environmental engagement tends to encourage international lending. Countries with such non-economic partnerships also find it easier to engage in economic exchanges since they face the possibility that debt default might also spill over to hinder their non-economic relationships. We present a theoretical model of these ideas, and then verify their empirical importance using a bilateral cross-section of data on international crossholdings of assets and environmental treaties. Our results support the notion that international environmental cooperation facilitates economic exchange.
JEL Classification: F02; F10; F34;
https://doi.org/10.24148/wp2006-33
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Provider: Federal Reserve Bank of San Francisco
Part of Series: Working Paper Series
Publication Date: 2006-10-01
Number: 2006-33
Note: Draft Revised as of: October 19, 2006.