Foreign Languages and Trade FIW外语与贸易FIW.pptVIP

Introduction Do languages affect trade? Easier communication ? lower transaction costs ? greater trade Trade analysis (gravity model) typically accounts for common official language E.g. Rose (2000): common language increases trade by 50% Introduction (cont’d) Gravity models: official languages only Dummy variables, not proficiency Proficiency varies across countries E.g. French in France, Belgium, Luxembourg, Switzerland, Canada,… Other languages besides official ones matter too Non-official indigenous languages Foreign languages Introduction (cont’d) Rauch (1999, 2001), Rauch and Trindad