【Brownbag】Market Size and Institutions in a Global Economy
2024/06/21
研討會日期 : 2024-06-21
時間 : 12:10
主講人 : Professor Wen-Tai Hsu (許文泰)
地點 : Conference Room B110
演講者簡介 : Professor Wen-Tai Hsu received his PhD from the University of Minnesota in 2008. He is a Research Fellow at IEAS. His research fields are Urban and Regional Economics, and International Economics.
演講摘要 : This paper studies the relationship between market size and institutional quality in a global economy. Using a comprehensive dataset from the International Country Risk Guide, we examine how real market access-- constructed using a structural gravity equation framework -- affects various dimensions of institutional quality from 1986 to 2010. While several institutional aspects show positive correlations with market access in the OLS results, only the dimension of Law and Order remains significant across different instrumental variable estimations, underscoring the relevance of contracting institutions. We then propose a theory of market size and institution by extending the incomplete-contract model in Acemoglu, Antras, and Helpman (2007) to an open-economy environment where national planners optimize their countries' welfare by choosing institutional qualities. Under different types of equilibria, our theory matches the empirical fact that larger real market access leads to a higher institutional quality. It also discusses the direction of the scale effect of population, discovers a trade-diversion effect when only a subset of countries trade-liberalize, and generates a flying-geese pattern of institutional improvement.
