Title: Non-economic engagement and international exchange
First published: 2008
Description: "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 cross-holdings of assets and environmental treaties.  Our results support the notion that international environmental cooperation facilitates economic exchange"--National Bureau of Economic Research web site.
LC classification: HB1