International Trade and Institutional Change

This paper analyzes the impact of international trade on the quality of institutions, such as contract enforcement, property rights, or investor protection. It presents a model in which institutional differences play two roles: they create rents for some parties within the economy, and they are a source of comparative advantage in trade. Institutional quality is determined in a Grossman-Helpman type lobbying game. When countries share the same technology, there is a race to the top" in institutional quality: irrespective of country characteristics, both trade partners are forced to improve institutions after opening. On the other hand, domestic institutions will not improve in either trading partner when one of the countries has a strong enough technological comparative advantage in the good that relies on institutions. We test these predictions in a sample of 141 countries, by extending the geography-based methodology of Frankel and Romer (1999). Countries whose exogenous geographical characteristics predispose them to exporting in institutionally intensive sectors enjoy significantly higher institutional quality.trade, institutional change

International Trade and Institutional Change

This paper analyzes the impact of international trade on the quality of institutions, such as contract enforcement, property rights, or investor protection. It presents a model in which imperfect institutions create rents for some parties within the economy, and are a source of comparative advantage in trade. Institutional quality is determined as an equilibrium of a political economy game. When countries share the same technology, there is a "race to the top'' in institutional quality: irrespective of country characteristics, both trade partners are forced to improve institutions after opening. On the other hand, domestic institutions will not improve in either country when one of the countries has a strong enough technological comparative advantage in the institutionally intensive good. We provide empirical evidence for a related cross-sectional prediction of the model. Countries whose exogenous geographical characteristics predispose them to exporting in institutionally intensive sectors exhibit significantly higher institutional quality.

Hydrodynamic flows of non-Fermi liquids: magnetotransport and bilayer drag

We consider a hydrodynamic description of transport for generic two dimensional electron systems that lack Galilean invariance and do not fall into the category of Fermi liquids. We study magnetoresistance and show that it is governed only by the electronic viscosity provided that the wavelength of the underlying disorder potential is large compared to the microscopic equilibration length. We also derive the Coulomb drag transresistance for double-layer non-Fermi liquid systems in the hydrodynamic regime. As an example, we consider frictional drag between two quantum Hall states with half-filled lowest Landau levels, each described by a Fermi surface of composite fermions coupled to a $U(1)$ gauge field. We contrast our results to prior calculations of drag of Chern-Simons composite particles and place our findings in the context of available experimental data.Comment: 4 pages + references + supplementary information, 1 figur