The relationship between trade and institutions has been extensively debated by trade economists and political scientists. The aim of the present paper is to provide some empirical evidence on the causal relationship between insitutions and trade flows in a panel framework. We present a Granger causality test (1969) as well as a Hurlin and Venet (2001) test for panel data using a bilateral trade flows panel that covers 29 years. The issue of zero flows of trade is handled by using a panel Poisson Pseudo-Maximum Likelihood estimator.
Nicolini, M., Paccagnini, A. (2011). Does Trade Foster Institutions? An Empirical Assessment. REVIEW OF ECONOMICS AND INSTITUTIONS.
Does Trade Foster Institutions? An Empirical Assessment
PACCAGNINI, ALESSIA
2011
Abstract
The relationship between trade and institutions has been extensively debated by trade economists and political scientists. The aim of the present paper is to provide some empirical evidence on the causal relationship between insitutions and trade flows in a panel framework. We present a Granger causality test (1969) as well as a Hurlin and Venet (2001) test for panel data using a bilateral trade flows panel that covers 29 years. The issue of zero flows of trade is handled by using a panel Poisson Pseudo-Maximum Likelihood estimator.
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