Ineffective institutions increase transaction costs and reduce trade. This paper shows that differences in the … effectiveness of institutions offer an explanation for the tendency of OECD countries to trade disproportionately with each other …

This paper studies the effect of institutions on trade flows, using a gravity modelapproach. We start from a standard …-18%. Furthermore, a better quality of formal institutions tends to coincide with moretrade. An increase in regulatory quality of one …

estimate gravity equations to investigate how trade patterns are affected by variation in the quality of institutions across … countries. The results show that institutions matter most for trade in differentiated goods. This variation in the importance of …