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Noneconomic Engagement and International Exchange: The Case of Environmental Treaties
Author(s) -
ROSE ANDREW K.,
SPIEGEL MARK M.
Publication year - 2009
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2009.00208.x
Subject(s) - international economics , international trade , debt , business , economics , finance
We examine the role of noneconomic 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 noneconomic 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 noneconomic 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.