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Trade costs and democracy

dc.contributor.authorSiroën, Jean-Marc
HAL ID: 11077
ORCID: 0000-0003-4494-3169
dc.contributor.authorGranger, Clotilde
dc.contributor.authorDuc, Cindy
dc.date.accessioned2011-05-10T12:26:09Z
dc.date.available2011-05-10T12:26:09Z
dc.date.issued2004
dc.identifier.urihttps://basepub.dauphine.fr/handle/123456789/6251
dc.language.isoenen
dc.subjectEconometric estimationsen
dc.subjectdemocracyen
dc.subjecttrade liberalizationen
dc.subject.ddc337en
dc.subject.classificationjelC21en
dc.subject.classificationjelF13en
dc.subject.classificationjelH23en
dc.subject.classificationjelP16en
dc.titleTrade costs and democracyen
dc.typeDocument de travail / Working paper
dc.description.abstractenDuring the three past decades, most developing countries have opted for both a higher degree of political democracy as well as increased trade openness. This trend raises the question of the effect of democracy on trade liberalization. To address the question, this paper proposes a theoretical analysis based on a variant of an HOS model, but assuming allocative effects between the export sector and the non-tradable sector. This analytical framework preserves the Stolper-Samuelson effects, even with complete specialization of countries. Furthermore, it is assumed that in democratic regimes, the policies enforced are those preferred by the median-voter. If, in a country, the tradable sector is labour-intensive , workers gain from free trade and a democratic government should adopt trade liberalization policies. We expose a political economic theoretical model in which democracies apply a tariff to imports all the lower as the other trade costs are low. The theoretical model has led to a gravity equation so that the expected positive relation between democracy and trade can be tested econometrically. We are interested in the influence of democracy on trade costs and test the idea that institutional trade costs are lower when trade occurs between democracies. Econometric estimations confirm that bilateral trade is positively and significantly affected when the two partners are democratic.en
dc.publisher.nameUniversité Paris-Dauphine
dc.publisher.cityParis
dc.identifier.citationpages19en
dc.relation.ispartofseriestitleCahiers de recherche d'EURISCOen
dc.relation.ispartofseriesnumber2004-14en
dc.description.sponsorshipprivateouien
dc.subject.ddclabelEconomie internationaleen


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