THE RELATIONSHIP BETWEEN EXPORTS, CREDIT RISK AND CREDIT GUARANTEES

This paper shows how risk mitigation through export credit insurance could increase exports to high risk importing countries. The key result is that the export response curve is more inelastic in the presence of payment risk, and the effect of insurance is to make the export curve more elastic. Statistical evidence supports this fundamental premise.International Relations/Trade,

THE RELATIONSHIP BETWEEN EXPORTS, CREDIT RISK AND CREDIT GUARANTEES

This paper provides an understanding of how the export credit worthiness of an importing country affects export sales of agricultural and other manufactured products and how export credit guarantees or insurance can mitigate risks of non-payment. A theoretical model is developed. It shows how risk mitigation through export credit insurance could increase exports to high risk importing countries. The key result is that the export response curve is more inelastic in the presence of payment risk, and the effect of insurance is to make the export curve more elastic. Statistical evidence supports this fundamental premise.International Relations/Trade,

Empirically Analyzing the Impacts of U.S. Export Credit Programs on U.S. Agricultural Export Competitiveness

This paper looked at the on the ongoing debate on the use of public export credit programs and their impact on US exports. Our results indicate that cost saving is significant beneficial to the importing countries as a result of the export credit programs. There is also an increase in US exports as a result of the US export credit programs. However, there is a reduction in cost savings to the importing countries when the length of repayment of export credit is 180 days. Thus, the more restrictive terms and conditions of officially supported export credits which the WTO is trying to discipline based on their implicitly subsidized components will have some adverse impact on the importing countries.International Relations/Trade,

THE RELATIONSHIP BETWEEN EXPORTS, CREDIT RISK AND CREDIT GUARANTEES

This paper provides an understanding of how the export credit worthiness of an importing country affects export sales of agricultural and other manufactured products and how export credit guarantees or insurance can mitigate risks of non-payment. A theoretical model is developed. It shows how risk mitigation through export credit insurance could increase exports to high risk importing countries. The key result is that the export response curve is more inelastic in the presence of payment risk, and the effect of insurance is to make the export curve more elastic. Statistical evidence supports this fundamental premise

THE RELATIONSHIP BETWEEN EXPORTS, CREDIT RISK AND CREDIT GUARANTEES

This paper shows how risk mitigation through export credit insurance could increase exports to high risk importing countries. The key result is that the export response curve is more inelastic in the presence of payment risk, and the effect of insurance is to make the export curve more elastic. Statistical evidence supports this fundamental premise

Empirically Analyzing the Impacts of U.S. Export Credit Programs on U.S. Agricultural Export Competitiveness

This paper looked at the on the ongoing debate on the use of public export credit programs and their impact on US exports. Our results indicate that cost saving is significant beneficial to the importing countries as a result of the export credit programs. There is also an increase in US exports as a result of the US export credit programs. However, there is a reduction in cost savings to the importing countries when the length of repayment of export credit is 180 days. Thus, the more restrictive terms and conditions of officially supported export credits which the WTO is trying to discipline based on their implicitly subsidized components will have some adverse impact on the importing countries

EMPIRICALLY ANALYZING THE IMPACT OF U.S. EXPORT CREDIT PROGRAMS ON U.S. AGRICULTURAL TRADE

The use of officially supported export credit programs for agricultural products has been a widely debated issue at the World Trade Organization (WTO) negotiations in recent years. The European Union (EU) has agreed to reduce their direct export subsidies if the United States reduces its export credits. Specifically, the main issue of contention is whether to limit the length of repayment of the U.S. export credit programs to a period not exceeding 180 days. However, the impacts of such a reduction on the importing countries and the United States are not clear. In light of this debate, we analyze the impact of a reduction in the repayment period to 180 days on importing countries and examine the subsequent effects on U.S. exports supported through export credit programs. Our results indicate that importing countries do indeed benefit from export credit programs and are likely to increase their imports when they are in place. However, the benefits are reduced when the export credit repayment period is limited to 180 days. This implies that the more restrictive terms and conditions that the WTO is trying to impose over these programs, based on their implicitly subsidized components, may have an adverse impact on importing countries

A Theoretical Analysis of Economic Impacts of Export Credit Insurance and Guarantees

This paper developed an economic framework to analyze the economic impacts of an ECP on trade flows within the context of a partial equilibrium approach which assumes that non-payment risks are distinct between selling at home and abroad based on difficulties and expense in recovering non-payments are different in the two markets. A two-country partial equilibrium trade model is developed to analyze the economic impact of the export credit insurance and/or guarantees on trade flows. The results also show that to minimize or recover the efficiency loss, an export credit program can be employed to increase the exported quantity and reduce the excessively high equilibrium price as a result of non-payment risk. The overall net welfare loss of the two countries is smaller than the recovered efficiency loss. From the perspective of recovering efficiency loss, the use of an export credit program is justifiable.Risk and Uncertainty,

A Theoretical Analysis of Economic Impacts of Export Credit Insurance and Guarantees

This paper developed an economic framework to analyze the economic impacts of an ECP on trade flows within the context of a partial equilibrium approach which assumes that non-payment risks are distinct between selling at home and abroad based on difficulties and expense in recovering non-payments are different in the two markets. A two-country partial equilibrium trade model is developed to analyze the economic impact of the export credit insurance and/or guarantees on trade flows. The results also show that to minimize or recover the efficiency loss, an export credit program can be employed to increase the exported quantity and reduce the excessively high equilibrium price as a result of non-payment risk. The overall net welfare loss of the two countries is smaller than the recovered efficiency loss. From the perspective of recovering efficiency loss, the use of an export credit program is justifiable