Institutions Trade & Economic Development
By Kristy Buzard (Syracuse University) Going back to the mid-1980s, the repeated prisoner’s dilemma has been used to model the absence of strong external enforcement mechanisms for trade agreements.[1] Cooperation is enforced by promises of future punishment for any deviation from the agreement, and the amount of cooperation that can be achieved depends on the […]
By Takumi Naito (Vanderbilt University and Waseda University) Trade liberalization encourages more productive firms to start exporting, while it forces more unproductive firms to exit from their domestic markets. The increase in the average productivity because of tougher selection contributes to higher welfare of countries. This idea, captured by the Melitz model of heterogeneous firms, […]
By James Lake (Southern Methodist University) and Santanu Roy (Southern Methodist University) The principle of non-discrimination lies at the heart of the WTO. GATT Article I mandates that, for a given product, a country cannot set different tariffs on different trading partners. Indeed, GATT Article I has provided the bedrock for the various rounds of […]
By Ben Zissimos (University of Exeter Business School) In a landmark paper, Daron Acemoglu and James Robinson argue that a key purpose of democratization is to resolve a commitment problem faced by a ruling elite under the threat of revolution.[1] Their motivation focuses on 19th and early 20th Century Europe, during which time a number […]
By Ben Zissimos (University of Exeter Business School) Special and differential treatment (SDT) is effectively a set of exemptions from MFN extended to developing country members of the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO).[1] (MFN (most favored nation) treatment is the principle that any terms agreed between two parties to a […]
By Ahmad Lashkaripour (Indiana University Bloomington) What type of goods does the US export to Canada? What type of goods does it export to New Zealand? Guided by a standard gravity model we know very well that the US exports more (in value terms) to Canada than New Zealand. However, gravity models tell us little […]