51. The Effects of Political Institutions on the Extensive and Intensive Margins of Trade
- Author
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John Londregan, Marc Ratkovic, In Song Kim, and Massachusetts Institute of Technology. Department of Political Science
- Subjects
Organizational Behavior and Human Resource Management ,Block trade ,Sociology and Political Science ,media_common.quotation_subject ,05 social sciences ,Authoritarianism ,International economics ,Product differentiation ,Autocracy ,Democracy ,0506 political science ,Politics ,Margin (machine learning) ,0502 economics and business ,Political Science and International Relations ,050602 political science & public administration ,Economics ,Polity ,050207 economics ,Law ,media_common - Abstract
We present a model of political networks that integrates both the choice of trade partners (the extensive margin) and trade volumes (the intensive margin). Our model predicts that regimes secure in their survival, including democracies as well as some consolidated authoritarian regimes, will trade more on the extensive margin than vulnerable autocracies, which will block trade in products that would expand interpersonal contact among their citizens. We apply a two-stage Bayesian LASSO estimator to detailed measures of institutional features and highly disaggregated product-level trade data encompassing 131 countries over a half century. Consistent with our model, we find that (a) political institutions matter for the extensive margin of trade but not for the intensive margin and (b) the effects of political institutions on the extensive margin of trade vary across products, falling most heavily on those goods that involve extensive interpersonal contact.
- Published
- 2019