The Effect of Domestic Regulation on Services Trade Revisited
This paper uses the previously unexploited Eurostat ITS dataset and the latest release of the OECD Product Market Regulation indicators to reevaluate the effect of domestic regulation on cross border services trade. The empirical analysis is guided by recent theoretical advances in the theoretical derivation of the gravity equation which allows to avoid common sources of bias in previous studies. Once these common sources of bias are eliminated, the support for the claim that the domestic level of regulation reduces services trade is weakened.
International trade; services; gravity model; regulation
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