Discussion paper

DP3539 A Gravity Model of International Lending: Trade, Default and Credit

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.

£6.00
Citation

Rose, A and M Spiegel (2002), ‘DP3539 A Gravity Model of International Lending: Trade, Default and Credit‘, CEPR Discussion Paper No. 3539. CEPR Press, Paris & London. https://cepr.org/publications/dp3539