How Important is State Enforcement for Trade?
Peter T. Leeson
George Mason University - Department of Economics
American Law and Economics Review, Forthcoming
This paper investigates the effect of state contract enforcement on international trade. I estimate a gravity model of bilateral trade using panel data that covers 157 countries over the last 50 years. I find that state enforcement increases trade between nations - but less impressively than its status as essential for flourishing trade suggests. My analysis provides the first direct evidence of state enforcement's impact on trade in general and international trade in particular.
Accepted Paper Series
Date posted: December 12, 2005
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