We test how domestic political institutions moderate the effect of
leadership turnover on relations between states. Deriving hypotheses
from recent theoretical work, Bueno de Mesquita et al. and McGillivray
and Smith, we examine how leader change affects trading relations
between states using dyadic trade data. Consistent with hypotheses, we
find that large winning coalition systems, such as democracies, are
relatively immune from the vagaries of leadership change. In such
systems, trade remains relatively constant whether leader change occurs
or not. In contrast, when winning coalition size is small, as in
autocratic states, leadership change profoundly alters relations,
causing a decline in trade. Finally, we examine instances of poor
relations, measured by a significant decline in trade compared to
historical levels. As predicted, instances of poor relations are less
common between pairs of democracies than other dyadic pairings.
Further, leadership turnover in autocratic systems restores trading
relations between states. The effect of leadership change in
democracies is much less pronounced.An
earlier version of this article was prepared for the 2002 Peace Science
Society meeting in Tucson, Arizona. We gratefully acknowledge the
financial support of the National Science Foundation, SES-0226926. We
thank John Oneal and Bruce Russett for generously making their data
available to us. We thank audiences at New York University, the
University of Rochester, Yale University, and several anonymous
reviewers for their helpful comments.