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Political stability and trade agreements: Evidence for ‘endgame FTAs’

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  • Rotunno, Lorenzo

Abstract

This paper empirically examines the idea that Free Trade Agreements (FTAs) are more likely to be signed by governments playing ‘endgames’; that is, when governments are about to lose power. Two empirical strategies shed light on this hypothesis. One relies on events that increase the probability of political turnover, the other on term limits. I find that countries are more likely to sign FTAs after the unexpected exit of their leaders, when political instability is high. The key finding is partly confirmed in the term-limits strategy as governments are found to form more FTAs during their last term in office.

Suggested Citation

  • Rotunno, Lorenzo, 2016. "Political stability and trade agreements: Evidence for ‘endgame FTAs’," European Journal of Political Economy, Elsevier, vol. 45(C), pages 133-148.
    • Handle: RePEc:eee:poleco:v:45:y:2016:i:c:p:133-148
    DOI: 10.1016/j.ejpoleco.2016.10.006
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    More about this item

    Keywords

    Trade Agreements; Political Rents; Political Turnover;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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