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Clear and Clean: The Fixed Effects of the Liberal Peace

  • Oneal, John R.
  • Russett, Bruce
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    In their article in this issue, Donald P. Green, Soo Yeon Kim, andDavid H. Yoon claim, contrary to liberal theory and extensive evidencefrom pooled time-series analyses, that neither joint democracy noreconomic interdependence significantly reduces the frequency ofmilitarized interstate disputes when dyadic fixed effects are taken intoaccount. Similarly, their fixed-effects analyses contradict theory andprevious evidence that democracies have higher levels of trade with oneanother than do other types of states. Our reexamination, however,refutes both claims and reinforces previous findings. Theirxed-effects analysis of disputes produces distorted results because theyconsider a relatively short period of time, 1951 92, in which variationis limited in the binary dependent variable and in the key independentvariables. When we analyze a longer period (1886 1992) with greatervariation in the data, the results confirm that democracy andeconomically important trade have important pacific benefits. Thedifferences between our analyses of the volume of bilateral trade andthose of Green, Kim, and Yoon primarily arise from a seemingly minormethodological decision: how to treat zero levels of trade when takingthe logarithm. A more reasonable method produces more reasonableresults: democracies have higher levels of trade than expected on purelyeconomic grounds. A fixed-effects model is seldom the best means ofanalyzing dyadic data. Indeed, our analyses illustrate the pitfalls thatcan occur in its use. Nevertheless, our findings regarding disputes andtrade provide additional confirmations of liberal theories ofinternational relations.

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    Article provided by Cambridge University Press in its journal International Organization.

    Volume (Year): 55 (2001)
    Issue (Month): 02 (March)
    Pages: 469-485

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    Handle: RePEc:cup:intorg:v:55:y:2001:i:02:p:469-485_44
    Contact details of provider: Postal: Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK
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