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Political institutions and trade-evidence for the long-run relationship and causality

  • Krenz, Astrid

We examine the long-run effects of the political institutional framework, measured by the political risk component of the International Country Risk Guide, on trade. Our results suggest that an improved political institutional framework is both a cause and a consequence of increased trading activity. However, we find no significant relationship in case of exporting activity for the high-income countries and the countries that possess better political institutions.

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Paper provided by University of Goettingen, Department of Economics in its series Center for European, Governance and Economic Development Research Discussion Papers with number 182.

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Date of creation: 2013
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Handle: RePEc:zbw:cegedp:182
Contact details of provider: Postal: Platz der Göttinger Sieben 3, 37073 Göttingen
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  1. Barry Eichengreen & David Leblang, 2006. "Democracy and globalisation," BIS Working Papers 219, Bank for International Settlements.
  2. O'Rourke, Kevin Hjortshøj & Taylor, Alan M., 2006. "Democracy and Protectionism," CEPR Discussion Papers 5698, C.E.P.R. Discussion Papers.
  3. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
  4. Dierk Herzer, 2009. "Cross-country heterogeneity and the trade-income relationship," FIW Working Paper series 026, FIW.
  5. Eberhardt, Markus & Teal, Francis, 2009. "Econometrics for Grumblers: A New Look at the Literature on Cross-Country Growth Empirics," MPRA Paper 15813, University Library of Munich, Germany.
  6. Peter Pedroni, 2001. "Purchasing Power Parity Tests in Cointegrated Panels," Department of Economics Working Papers 2001-01, Department of Economics, Williams College.
  7. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
  8. Andrei A. Levchenko, 2004. "Institutional Quality and International Trade," IMF Working Papers 04/231, International Monetary Fund.
  9. Herzer, Dierk & Strulik, Holger, 2013. "Religiosity and income: A panel cointegration and causality analysis," Center for European, Governance and Economic Development Research Discussion Papers 168, University of Goettingen, Department of Economics.
  10. Everaert Gerdie, 2011. "Estimation and Inference in Time Series with Omitted I(1) Variables," Journal of Time Series Econometrics, De Gruyter, vol. 2(2), pages 1-28, January.
  11. Milner, Helen V. & Kubota, Keiko, 2005. "Why the Move to Free Trade? Democracy and Trade Policy in the Developing Countries," International Organization, Cambridge University Press, vol. 59(01), pages 107-143, January.
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