December, 2005

How Important is State Enforcement for Trade? - Working Paper

  • Peter Leeson

    Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
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This working paper investigates the effect of state contract enforcement on international trade. Following Rose, Peter Leeson estimates a gravity model of bilateral trade using panel data that covers 157 countries over the last 50 years. He finds that state enforcement increases trade between nations--but less impressively than its status as essential for flourishing trade suggests. The author's analysis provides the first direct evidence of state enforcement’s impact on trade in general and international trade in particular.