Trust-based trade
Autor(a) principal: | |
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Data de Publicação: | 2005 |
Outros Autores: | |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Institucional do FGV (FGV Repositório Digital) |
Texto Completo: | http://hdl.handle.net/10438/12966 |
Resumo: | There is substantially more trade within national borders than across borders. An important explanation for this fact is the weak enforcement of international contracts. We develop a model in which agents build reputations to overcome this institutional failure. The model describes the interplay between institutional quality, reputations and the dynamics of international trade. It also rationalizes several empirical regularities. We find that history matters for trade volumes, but that its effects vary with the institutional setting of the country. The same is true for the efticacy of trade liberalization programs. Moreover, while stricter enforcement of contracts enhances trade in the short run, it makes it harder for individual traders to develop good reputations. We show that this indirect negative effect may produce an 'institutional trap': for sufliciently low initial levels of contract enforcement, a small tightening in enforcement reduces future trade fiows. We find also that search frictions aggravate the problems created by weak enforceability of contracts, even if they impose no direct cost on agents. The model allows extensions in several directions. We outline two of them, indicating how one could study transnational networks and the effects of firm heterogeneity within our structure. |
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Ornelas, EmanuelAraujo, Luis Fernando Oliveira deEscolas::EPGEFGV2014-12-22T14:29:29Z2014-12-22T14:29:29Z2005-07-01http://hdl.handle.net/10438/12966There is substantially more trade within national borders than across borders. An important explanation for this fact is the weak enforcement of international contracts. We develop a model in which agents build reputations to overcome this institutional failure. The model describes the interplay between institutional quality, reputations and the dynamics of international trade. It also rationalizes several empirical regularities. We find that history matters for trade volumes, but that its effects vary with the institutional setting of the country. The same is true for the efticacy of trade liberalization programs. Moreover, while stricter enforcement of contracts enhances trade in the short run, it makes it harder for individual traders to develop good reputations. We show that this indirect negative effect may produce an 'institutional trap': for sufliciently low initial levels of contract enforcement, a small tightening in enforcement reduces future trade fiows. We find also that search frictions aggravate the problems created by weak enforceability of contracts, even if they impose no direct cost on agents. The model allows extensions in several directions. We outline two of them, indicating how one could study transnational networks and the effects of firm heterogeneity within our structure.engFundação Getulio Vargas. Escola de Pós-graduação em EconomiaSeminários de Almoço da EPGETodo cuidado foi dispensado para respeitar os direitos autorais deste trabalho. Entretanto, caso esta obra aqui depositada seja protegida por direitos autorais externos a esta instituição, contamos com a compreensão do autor e solicitamos que o mesmo faça contato através do Fale Conosco para que possamos tomar as providências cabíveisinfo:eu-repo/semantics/openAccessInternational tradeExport dynamicsContract enforcementReputationEconomiaComércio internacional - Modelos econométricosTrust-based tradeinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articlereponame:Repositório Institucional do FGV (FGV Repositório Digital)instname:Fundação Getulio Vargas (FGV)instacron:FGVORIGINAL000368757_o74t.pdf000368757_o74t.pdfapplication/pdf1531382https://repositorio.fgv.br/bitstreams/5f274943-9af3-442c-b651-f6c95c8c6e7d/download95d475d9766f30a4b94672ded47d192aMD51LICENSElicense.txtlicense.txttext/plain; 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dc.title.eng.fl_str_mv |
Trust-based trade |
title |
Trust-based trade |
spellingShingle |
Trust-based trade Ornelas, Emanuel International trade Export dynamics Contract enforcement Reputation Economia Comércio internacional - Modelos econométricos |
title_short |
Trust-based trade |
title_full |
Trust-based trade |
title_fullStr |
Trust-based trade |
title_full_unstemmed |
Trust-based trade |
title_sort |
Trust-based trade |
author |
Ornelas, Emanuel |
author_facet |
Ornelas, Emanuel Araujo, Luis Fernando Oliveira de |
author_role |
author |
author2 |
Araujo, Luis Fernando Oliveira de |
author2_role |
author |
dc.contributor.unidadefgv.por.fl_str_mv |
Escolas::EPGE |
dc.contributor.affiliation.none.fl_str_mv |
FGV |
dc.contributor.author.fl_str_mv |
Ornelas, Emanuel Araujo, Luis Fernando Oliveira de |
dc.subject.eng.fl_str_mv |
International trade Export dynamics Contract enforcement Reputation |
topic |
International trade Export dynamics Contract enforcement Reputation Economia Comércio internacional - Modelos econométricos |
dc.subject.area.por.fl_str_mv |
Economia |
dc.subject.bibliodata.por.fl_str_mv |
Comércio internacional - Modelos econométricos |
description |
There is substantially more trade within national borders than across borders. An important explanation for this fact is the weak enforcement of international contracts. We develop a model in which agents build reputations to overcome this institutional failure. The model describes the interplay between institutional quality, reputations and the dynamics of international trade. It also rationalizes several empirical regularities. We find that history matters for trade volumes, but that its effects vary with the institutional setting of the country. The same is true for the efticacy of trade liberalization programs. Moreover, while stricter enforcement of contracts enhances trade in the short run, it makes it harder for individual traders to develop good reputations. We show that this indirect negative effect may produce an 'institutional trap': for sufliciently low initial levels of contract enforcement, a small tightening in enforcement reduces future trade fiows. We find also that search frictions aggravate the problems created by weak enforceability of contracts, even if they impose no direct cost on agents. The model allows extensions in several directions. We outline two of them, indicating how one could study transnational networks and the effects of firm heterogeneity within our structure. |
publishDate |
2005 |
dc.date.issued.fl_str_mv |
2005-07-01 |
dc.date.accessioned.fl_str_mv |
2014-12-22T14:29:29Z |
dc.date.available.fl_str_mv |
2014-12-22T14:29:29Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
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info:eu-repo/semantics/article |
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article |
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http://hdl.handle.net/10438/12966 |
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eng |
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openAccess |
dc.publisher.none.fl_str_mv |
Fundação Getulio Vargas. Escola de Pós-graduação em Economia |
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Fundação Getulio Vargas. Escola de Pós-graduação em Economia |
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