TRADE LIBERALIZATION AND ASSET MARKETS

摘要: This paper identifies the liberalizing effect of financial market development on trade policy. We examine a small open economy which is characterized by stochastic productivity and populated risk averse residents who use asset markets to acquire diversified portfolios. The composition these portfolios influences individual incentives seek intervention from government since ownership structure reflected therein determines resident’s interest in returns generated particular industries. Interests protection for any one industry are diluted when individuals hold well-diversified model links extensive liberalization second half twentieth century globalization markets, also reveals that protectionist interests can persist due nontradeability some assets. behavior private agents consistent with trends economies developed domestic access global observed historical trade-policy phenomena.