retaliation bargaining and the pursuit of free and fair trade that domestic political economic factors are important determinants of a nation s trade barriers has been empirically well established however the question of how effective strategically retaliatory trade barriers are in deterring foreign protectionism has received far less systematic empirical attention in this article we use bilateral nontariff barrier ntb data between the united states and five developed partner countries japan france germany italy and the united kingdom to systematically examine the effectiveness of strategic retaliation we employ a simultaneous tobit model where the home and foreign ntb levels are determined endogenously in a bilateral game the model provides estimates of deterrence coefficients that is the reduction in foreign trade barriers as a result of u s retaliation which we use to characterize the nature of bilateral ntb games our hope is that the empirical results presented here which have realistic though controversial implications will inform u s trade policy

the gender gap fertility and growth changes in fertility have long been recognized as important correlates of economic growth with the relationship between the level of fertility and the level of income per capita being one of the strongest observable correlations in cross country data this paper examines the linkages between fertility and growth theory the structure of the model is presented in sections on production couples decision making system dynamics and steady state equilibria the first component of the model is that increases in capital per worker raise womens relative wages since capital is more complementary to womens labor input than to mens the second component is that increasing womens relative wages reduces fertility by raising the cost of children more than household income finally lower fertility raises the level of capital per worker a positive feedback loop generates demographic transition a rapid decline in fertility accompanied by accelerated output growth

could tariffs be pro cyclical abstract conventional wisdom says that tariffs are counter cyclical we analyze the relationship between business cycles and applied mfn tariffs using a disaggregated product level panel dataset covering 72 countries between 2000 and 2011 strikingly and counter to conventional wisdom we find that tariffs are pro cyclical further investigation reveals that this pro cyclicality is driven by the tariff setting behavior of developing countries tariffs are acyclical in developed countries we present evidence that pro cyclical market power drives the pro cyclicality of tariffs in developing countries providing further evidence of the importance of terms of trade motivations in explaining trade policy

competition in political and economic markets do anomalies play an important role in explaining economic and political choices are political decisions more prone to anomalies irrationality and inefficiency than economic decisions in their integration of results derived from experimental psychology and applied political economy frey and eichenberger 1990 argue that social scientists ought to answer these questions in the affirmative after examining a large body of choice data frey and eichenberger conclude that individuals deviate from the axioms of rational choice in their view the resultant anomalies in individual behavior are unaffected by the aggregation which occurs in the economic marketplace they conclude that political decision making systems correct no larger a proportion of these anomalies than are corrected by the economic market in many institutional settings outlined in their paper decision making systems can be expected to magnify individuals deviations from rational behavior system wide irrational behavior will then produce less frequent trading and a less efficient allocation of resources in this note we examine two components of frey and eichenberger s argument first we reconsider their evidence for irrational behavior in light of a larger body of experimental data which includes choices made in market settings second we argue that competition in political markets will tend to eliminate aggregate anomalies just as it does in economic markets experimental economists often generate data which distinguish between choices individuals indicate in unstructured environments and transactions individuals consummate in markets initial statements regarding choices are often inconsistent with subsequent trading behavior these data indicate that the economist s maximization paradigm based on tenets of rational choice is

a political economic analysis of congressional voting patterns on nafta this paper delves into the question of the determinants of congressional voting on nafta it uses a logit model to examine both house and senate votes and is able to use district specific estimates in the former it finds only very limited support for the thesis that narrowly defined employment gainers and losers were important determinants of congressional voting patterns though some substantial support that districts that were highly agricultural or already possessed a substantial hispanic population and skilled labor force and had the most to gain from the general effects of nafta lead to a positive effect on the probability that a member of the house would vote affirmatively contributions from labor unions lowered the likelihood of affirmative votes political partisanship and ideological positions apparently had little effect on the votes a representative s political capital had a marginally significant effect on the probability on an affirmative vote but it performed positively in the senate and negatively in the house

understanding international trade policies an emerging synthesis the international trade problems of the 1980s stimulated an expansion of scholarship on trade policies by economists and political scientists at least four distinct theoretical perspectives weave their way through recent literature that concentrates on the united states emphasizing market conditions policy beliefs and values national political institutions and global structures respectively new studies in each of these traditions advance beyond the work of their predecessors but none of the perspectives has yet proved adequate as a single unifying vehicle nevertheless we can also see clear movement toward a synthesis with single works blending insights from several traditions thus the books under review do not all fall neatly into the familiar exclusive categories of economics or political science the emerging synthesis needs strengthening in several ways including the development of conditioning hypotheses that will reduce remaining apparent confusions

legislative systems with absolute party discipline implications for the agency theory approach to the constituent legislator link this paper examines how the presence of absolute party discipline forces one to re examine some of the issues surrounding the constituent legislator link with absolute party discipline slack at the individual district level is determined by the policy choices of a political party rather than by the choices of the individual legislator this party discipline not only has implications for the representational effectiveness of individual legislators but also results in the terms slack and shirking no longer necessarily being synonymous the empirical work shows that canadian political parties engaged in wide scale shirking on the 1988 u s canada free trade agreement

foreign direct investment and the demand for protection in the united states over the past decade foreign direct investment fdi in the united states has grown dramatically changing the composition of many u s industries and bringing foreignowned firms into the domestic political process presumably fdi also has affected the politics of protection by both altering the domestic coalitions around protectionist demands and shifting the potential benefits that protectionism is likely to bring to understand this process we create and test a model that examines the level of inward investment and the extent to which this investment either complements or substitutes for existing import levels import complementing investment we suggest will cause a split in protectionist demands with local producers favoring protectionism and foreign investors pushing for free trade import substituting investment by contrast will create convergent interests between local and foreign producers in both cases inward fdi reshuffles traditional alliances and demands for protection challenging many prevailing views about protectionism in the united states

endogenous gender power household labor supply and the demographic transition abstract we present a microeconomic model of the household in which there exists no difference in spousal preferences but childrearing is more time costly for women bargaining between the wife and the husband forms the basis of household decisions marital bargaining power is determined according to the incomes of the spouses which in turn help to determine their reservation utility levels outside the marriage the endogeneity of bargaining power introduces a non cooperative element to the couples decision making problem because both the husbands and the wives take into account how their pre marital education decisions affect their marital power and the share they extract from household resources in the future the model predicts that wives invest more than is pareto efficient in their education in order to increase their bargaining power in marriage as a consequence couples have fewer children and consume more when exogenous structural changes lead women to invest more in education a corollary of the model is that empowering women directly through social reforms such as a lower gender wage gap leads to lower fertility and higher spousal consumption and leisure

capture and ideology in the economic theory of politics the economic theory of regulation long ago put public interest theories of politics to rest these theories have correctly been viewed as normative wishings rather than explanations of real world phenomena they have been replaced by models of political behavior that are consistent with the rest of microeconomics anthony downs 1957 james buchanan and gordon tullock 1965 george stigler 1971 sam peltzman 1976 recently however debate has arisen over whether some version of a public interest theory of regulation will have to be readmitted to our thinking about actions and results in the political arena what is at issue is the empirical importance of the altruistic publicly interested goals of rational actors in determining legislative and regulatory outcomes james kau and paul rubin 1979 kalt 1981 peltzman 1982 this study assesses the nature and significance of publicly interested objectives in a particular instance of economic policymaking u s senate voting on coal strip mining regulations the existence of such objectives is of course no contradiction of the economic view of human behavior kenneth arrow 1972 gary becker 1974 and may well be rooted in genetic biological history becker 1976 jack hirshleifer 1978 generally however individuals altruistic publicly interested goals have been given little attention this reflects the judgment that such goals are so empirically unimportant as to allow the use of occam s razor in positive models or well founded apprehensions that these goals are unusually difficult to identify measure and analyze notwithstanding the latter problem we find that approaches which confine themselves to a view of political actors as narrowly egocentric maximizers explain and predict legislative outcomes poorly the tracking and dissecting of the determinants of voting on coal strip mining policy suggest that the economic theory of politics has been prematurely closed to a broader conception of political behavior

exchange rates and industry demands for trade protection the recent confrontation between china and the united states over currency policy illustrates a broader phenomenon exchange rate misalignments tend to spill over into trade policy although previous studies have shown that aggregate protectionist activity is positively related to the level of the real effective exchange rate we explore this relationship at the industry level several industry specific characteristics determine the protectionist response to exchange rate changes including the degree of exchange rate pass through the level of import penetration and the share of imported intermediate inputs in total industry inputs we find that the marginal effect of currency appreciation on the number of industry level antidumping petitions is positive and significant only for industries with high pass through therefore exchange rates appear to induce demands for trade barriers only in industries where competitiveness is directly harmed by currency appreciation

selection and influence interest groups and congressional voting on trade policy studies of the effects of interest groups on congressional roll call voting typically view party and ideology as competing factors and rely on a factoral model of interests or a sectoral model including only interest groups with a direct stake in the vote we depart from that strategy in several ways we define interest groups at the level of standard industrial classification two digit codes and observe the universe of interests for 1979 90 we use measures of geographically and nongeographically based economic interests to estimate the representative s party and ideology we also consider the factor endowments of individuals within a district to examine their impact on floor votes we then investigate the influence of these interests on members party affiliation and ideology as well as a pool of five floor votes on foreign trade using instrumental variables for party and ideology economic interests account for a substantial portion of the variance in all cases and models that also include other explanatory variables are highly accurate in estimating floor votes

constituent interest vs legislator ideology the role of political opportunity cost this paper applies the economic model of legislative voting to the automobile industry domestic content vote in the u s house of representatives in 1982 we consider constituent interests for and against the ml and compare the predictive powers of alternative indicators of ideological preferences we also examine the role of political opportunity cost and find that lame ducks were significantly less likely to vote for the bill than were returnees to congress given the political advantages of voting for the bill this is consistent with the view that legislators were influenced by the case for freer trade

immigration and trade creation econometric evidence from canada immigrants may expand trade with their country of origin owing to superior knowledge of or preferential access to market opportunities the authors test this proposition using canadian trade data with 136 partners from 1980 to 1992 in an augmented gravity equation they find that a 10 percent increase in immigrants is associated with a 1 percent increase in canadian exports to the immigrant s home country and a 3 percent increase in imports they also find that among the primary categories of immigrants independents have the greater influence on trade immigration via the entrepreneur class appears to have less impact on trade than all other classes except refugees

equity market integration versus segmentation in three dominant markets of the southern african customs union cointegration and causality tests empirical tests of theories of financial market integration and segmentation have predominantly focused on developed oecd countries and the emerging markets of asia pacific this study uses a unique panel of equity market indices from the principal southern african customs union sacu markets it tests the hypothesis of market integration using a cointegration approach markets that are found to be integrated are then tested for evidence of granger causality through an error correction mechanism results obtained using var modelling techniques are compared to those using an ardl model while results lend support to existing trade macroeconomic and developmental linkages and effects between and within the countries there is some evidence for the presence of a regional factor common to african emerging markets that explains causality from namibia to south africa the results support the view that institution building has progressed which is considered to be a valuable contribution to growth promotion po

income splitting specialization and intra family distribution income splitting for tax purposes results in more specialization of wives but does this in turn generate more gender inequality in my dynamic bargaining model with a divorce threatpoint i find that who controls the couple s labour supply plays a crucial role in establishing this link if spouses choose their labour supply non cooperatively only the husband s increase but not her own decrease in labour supply introduces a negative term in the wife s change in welfare if the wife does not control her own labour supply a decrease in her own labour supply introduces an additional negative term la fragmentation du revenu aux fins d impot resulte en une plus grande specialisation des epouses mais est ce que cela engendre davantage d inegalite entre genres dans un modele de marchandage dynamique avec menace de divorce a la cle on decouvre que la personne qui controle l offre de travail du couple joue un role crucial dans la reponse a cette question si les epoux choisissent leurs offres de travail de maniere non cooperative seul l accroissement de l offre de travail de l epoux et non le declin de l offre de travail de l epouse introduit un terme negatif dans le changement de niveau de bien etre de l epouse si l epouse ne controle pas sa propre offre de travail un declin dans son offre de travail introduit un element negatif additionnel

bargaining over babies theory evidence and policy implications it takes a woman and a man to make a baby this fact suggests that for a birth to take place the parents should first agree on wanting a child using newly available data on fertility preferences and outcomes we show that indeed babies are likely to arrive only if both parents desire one and there are many couples who disagree on having babies we then build a bargaining model of fertility choice and match the model to data from a set of european countries with very low fertility rates the distribution of the burden of child care between mothers and fathers turns out to be a key determinant of fertility a policy that lowers the child care burden specifically on mothers can be more than twice as effective at increasing the fertility rate compared to a general child subsidy

testing theories of regime change hegemonic decline or surplus capacity two theories explain changes in the international regimes for major economic sectors a theory of hegemonic stability explains sectoral change as a consequence of ebbing hegemony a theory of surplus capacity attributes regime shifts to a serious global problem with excess production capacity in the sector the history of the world automobile industry shows that surplus capacity offers the better prediction and explanation for the timing of regime changes however a synthesis of the two theories is even more satisfactory hegemonic decline is a necessary but not sufficient condition for change surplus capacity in the absence of a hegemon creates the conditions necessary for change

firms and tariff regime change explaining the demand for protection although it is commonly argued that there is a connection between tariff levels and business conditions this hypothesis has not been subjected to systematic empirical analysis or given any theoretical basis the author presents two complementary theories of the movement of tariff levels in response to changing business conditions both explain tariff changes in terms of the changing political demands of business firms and both rely on the business cycle to drive these changing demands one theory is a conventional argument about changing opportunities for entry and exit the other treats firms as satisficers the theories yield similar predictions preliminary empirical analysis while consistent with both does not differentiate between them

the concentration of capabilities and international trade over the course of the previous two decades political scientists have become increasingly interested in the relationship between international politics and global trade much of the literature on this topic centers on the effects of a hegemonic distribution of power on commerce hegemonic stability theorists argue that hegemony is a necessary condition for the existence of a liberal economic order and that in the absence of a hegemon a liberal international economy is particularly difficult to establish and maintain however a growing number of theoretical and empirical critiques have been leveled against the gemonic stability theory and the issue of whether hegemony helps shape patterns of global trade continues to be the topic of heated debate

protectionist pressures and aggregate economic conditions comment on takacs this paper explores the influence of u s macroeconomic conditions and the international trade position on protectionist pressures as measured by escape clause cases brought before the international trade commission several possible difficulties with takacs pioneering empirical study of this topic are considered it is argued that while further support is found for her principal conclusion that the state of the domestic economy is a significant determinant of such protectionist pressures the quantitative strength of such aggregate factors is less than was suggested by takacs original study

u s corporate interests and the political economy of trade policy this paper examines the behavior of american corporations with respect to international trade policy initiatives during the 1970s using survey generated data on revealed corporate trade policy interests and firmand industry level data on company characteristics direct or proxy variables were developed and applied in linear regression equations using an ordered probit specification and in an alternative approach using factor analysis to construct a composite dependent variable hypothesized relationships were verified between corporate positions on trade liberalization and the intensity of competition from imports the benefits from improved access to foreign markets and internal risk pooling capabilities of firms firms exposed to the international competitive environment inevitably have a stake in national trade policy this paper explores the revealed behavior of u s corporations on matters of trade policy in the 1970s it develops a set of hypotheses linking corporate trade policy positions to a series of company and industry attributes these hypotheses are tested using survey generated information regarding corporate behavior on trade policy matters beginning with the protectionist burke hartke initiatives of the early 1970s through the post tokyo round period at the end of the decade studies of the political economy of protection typically begin with the proposition that import barriers create rents that can be appropriated by the protected industry the size of the rents to be obtained and their probable division among the various participants in the industry partly determine the intensity of protection seeking behavior lobbying undertaken by participants in the industry brock and magee 1978 the intensity is also influenced by the degree of success expected in the political arena and by imperfections in the lobbying process for instance the incentive to be a free rider on the lobbying efforts of others walter and jones 1981 the actual outcome of protection seeking activity is conditioned by a variety of political considerations as well for instance politicians may be constrained by the possibility of repercussions from groups adversely affected by protection including consumers and export oriented industries foreign competitors are also affected so that issues concerning foreign relations enter into the decision process in addition politicians may be influenced more generally by ideology party platforms or attitudes toward equity a number of researchers including ball 1967 fieleke 1976 clark 1980 and ray 1981a 1981b have verified that a significant positive correlation exists between nominal tariff rates or effective rates of protection across manufacturing industries and low skilled labor intensity taken to be an indicator of the intensity of import competition and thus related to the size of the rents that could be obtained by protection cheh 1974 and bale 1977 analyzed the determinants of the percentage reductions in rates of duty resulting from the kennedy round tariff cuts concluding that the cuts were determined in such a way as to minimize labor adjustment costs see also allen lewis and tower 1980 marvel and ray 1983 also explored the determinants of kennedy round tariff cuts finding the size of tariff cuts tended to be smaller if an industry was more concentrated or sold a larger fraction of its output to household consumers and larger if the industry was more intensive in research and development r d or more highly unionized the result for r d presumably represents the desire at the industry level for improved access to export markets achievable through larger reciprocal reductions in protection on the part of foreign countries along somewhat different lines baldwin 1976 analyzed several key congressional votes on the received for publication november 21 1983 revision accepted for publication december 14 1984 new york university the authors are grateful to robert lipsey robert j levenson j peter jarrett and james green for providing data that contributed to this study to jang ro lee ashok chatterjee and monica kaufmann for research assistance and to bill greene for providing advice on the estimation technique and computer program used to perform the statistical analysis thomas a pugel is also grateful for the support of an esmee fairbaim research fellowship at the university of reading 1 in both studies ray also explores nontariff barriers ntbs across u s manufacturing industries aside from finding a positive relationship between tariff rates and ntbs the results are not easily interpreted however there is some inferential evidence in walter 1971 which finds a significant positive relationship between ntb incidence and presumably relatively low skill intensive developing country exports

do husbands and wives pool their resources evidence from the united kingdom child benefit common preference models of family behavior imply income pooling a restriction on family demand functions such that only the sum of husband s income and wife s income affects the allocation of goods and time testing the pooling hypothesis is difficult because most family income sources are not exogenous to the allocations being analyzed in this paper we present an alternative test based on a natural experiment a policy change in the united kingdom that transferred a substantial child allowance to wives in the late 1970s using family expenditure survey data we find strong evidence that a shift toward greater expenditures on women s clothing and children s clothing relative to men s clothing coincided with this income redistribution

gender and say a model of household behaviour with endogenously determined balance of power the evidence that the same total income can lead a household to choose different consumption vectors depending on who brings in how much of the income has led to an effort to replace the standard unitary model of the household with the collective model which recognizes that the husband and the wife may have different preferences and depending on the balance of power between them the household may choose differently one weakness of this new literature is that it fails to recognize that the household s choice could in turn influence the balance of power once this two way relation between choice and power is recognized we are forced to confront some new questions concerning how to model the household this paper tries to answer these by defining a household equilibrium examining its game theoretic properties and drawing out its testable implications it is shown for instance that once we allow for dynamic interaction a household can exhibit inefficient behavior and that for a certain class of parameters children will be less likely to work in a household where power is evenly balanced than one in which all power is concentrated in the hands of either the father or the mother the paper also draws out the implications for female labor supply

growth waves systemic openness and protectionism there is a distinctively repetitive quality about trade policy problems domestic economic growth slows producers seek protection against foreign competitors and national decision makers raise barriers to trade while at the same time criticizing their counterparts in other governments for engaging in similar practices because trade is one of the more important topics in international and comparative political economy and because this scenario has played itself out more than a few times it is not surprising that a number of theorists have sought to model the underlying processes thought to produce movements toward and away from protectionism by now a variety of different types of approaches ranging from the cognitive to the systemic have been tried systemic structure ideas and ideology surplus capacity business cycles and shifts in elite orientation and domestic coalitions in response to external crises have been emphasized as principal theoretical foci our position is that the different levels of analysis and alternative foci all have merit and utility what they lack is an appreciation for the underlying systemic processes that link together these various facets of the political economy we seek to develop a theoretical argument that explicates these underlying processes the argument centers on recurring growth waves characterized in alternating pattern by the ascent of system leaders and the subsequent successful attempt of technological followers to catch up with the leaders the downturns of the growth waves produce conditions favoring protectionism but we contend the form and the intensity of protectionism that are likely to be produced will depend on which of the two types of growth waves is in progress ascent waves are characterized by the emergence of new technological leaders and a consequent increase in the gap between the leaders and the technological followers during the periods of structural transition and intense

the political economy of the tariff cycle how can protectionism and free trade succeed one another our answer focuses on the changing balance of private actors political demands these actors acquire interests in tariff policies because their assets are spatially concentrated and trade in these assets is subject to various limitations actors in regions experiencing no new investment in an established industry old regions have interests that sometimes differ from those in regions where there is new investment we show that old regions have no reason to be involved in tariff politics at business cycle peaks during troughs whether a state becomes more or less protectionist depends ceteris paribus on the relative political strength of old import competing and old exporting interests if old import competing industries outweigh the old exporters then protection will tend to increase at the trough and decrease at the peak of a business cycle the opposite result occurs when old exporters are more influential

the bargaining family revisited we suggest a family bargaining model where human capital investment decisions are made non cooperatively in a first stage while day to day allocation of time is determined later through nash bargaining but with non cooperative behaviour as the fall back one finding is that overinvestment in education may be even more of a problem in such a semi cooperative model than in a fully non cooperative one even though both the semi cooperative model and the fully non cooperative model predict overinvestment in education policy conclusions that follow from the two models are distinctly different jel classification d13 j24 les auteurs suggerent un modele de famille qui marchande ou les decisions d investissement en capital humain sont prises de maniere non cooperative dans un premier temps alors que l allocation du temps au jour le jour est determinee plus tard par un marchandage a la nash mais avec un comportement noncooperatif comme choix de second ordre on decouvre que le surinvestissement dans l education peut etre encore plus problematique dans un tel modele de semi cooperation que dans un modele de non cooperation meme si les deux modeles prevoient un surinves chtissement dans l education les conclusions au plan de la politique publique qui decoulent de ces deux modeles sont fort differentes

fertility taxation and family policy historically there is clear evidence of an inverse relationship between female labour supply and fertility however the relationship across countries is now positive countries like germany and italy with the lowest fertility also have the lowest female participation rates this paper analyses the extent to which this can be explained by public policy in particular taxation and the system of child support the results suggest that countries which have individual rather than joint taxation and which support families through child care facilities rather than child payments are likely to have both higher female labour supply and higher fertility

the political economy of nontariff barriers a cross national analysis nontariff barriers to trade are most pervasive when deteriorating macroeconomic conditions give rise to demands for protection by pressure groups when countries are sufficiently large to give policymakers incentives to impose protection and when domestic institutions enhance the ability of public officials to act on these incentives statistical results based on a sample of advanced industrial countries during the 1980s support the argument that the incidence of nontariff barriers tends to be greatest when the preferences of pressure groups and policymakers converge more attention should be devoted to the interaction between societal and statist factors in cross national studies of trade policy

the limitations of structural theories of commercial policy if a structural theory is one that purports to explain behavior in terms of environmental conditions and that largely eschews analysis of the internal processes of decision makers then it is difficult to identify a theory of commercial policy which is not structural most microeconomic theory is structural so are most balance of power theories in the realm of theories of commercial policy hegemonic stability theories as well as some recently developed theories of international tariff levels fit this description in the latter category judith goldstein s work which attempts to account for american commercial policy in terms of the ideology of american central decision makers and charles kindleberger s ambitious sketch of a general theory of 19th century tariff changes in terms of the diffusion of liberal ideology constitute lonely examples of nonstructural research strategies

tariffs and growth in the late 19th century the paper estimates the correlation between tariffs and economic growth in the late 19th century in the context of three types of growth equation unconditional convergence equations conditional convergence equations and factor accumulation models it does so for a panel of ten countries between 1875 and 1914 tariffs were positively correlated with growth in these countries during this period economic theory is ambiguous as regards the relationship between trade policy and growth the growth literature of the past decade has produced an impressive array of models in which protection can either increase or reduce long run growth rates grossman and helpman 1991 rivera batiz and romer 1991 stokey 1991 young 1991 such theoretical ambiguity invites empirical research while new growth theory is ambiguous on the subject the new empirical growth literature has produced a consensus that free trade is positively associated with growth based on evidence from the late 20th century but see rodrlguez and rodrik 1999 for a sceptical review of the literature the clear

unemployment collective bargaining and the demand for protection there is a widespread consensus among nonacademic observers that labor unions with large numbers of unemployed members have been central actors in political coalitions demanding protectionist trade policies since the mid 1970s in advanced industrial societies yet trade unions and unemployment are hardly mentioned in most theories of the politics of international trade the purpose of this paper is to develop a theoretical framework for understanding the importance of unemployment as a determinant of protectionist demands that is consistent with optimizing behavior on the part of union members and firms models of labor negotiations derived from cooperative bargaining theory are used to illustrate why the material benefits of protection received by union members and their employers in protected industries increase when union members are unemployed even when workers are risk neutral and capital is immobile

trade wars and trade talks when governments meet in the international arena their actions reflect the political situations at home previous studies of trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest here we introduce domestic politics into the analysis of international economic relations we study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups our analysis sheds light on the determinants of the structure of protection in non cooperative and cooperative policy equilibria

the political economy of administered protection trade restrictions are hardly ever voted directly by congress though the threat of direct congressional action is frequently present pressure for protection is usually applied through the major instruments for the administrative regulation of imports the antidumping and countervailing duty procedures and the escape clause mechanism in this paper we will examine these instruments for the administrative regulation of imports the form of the paper is not novel a theory of how these mechanisms work is developed then operational implications of this theory are deduced and tested over the record of countervailing duty antidumping and escape clause cases decided from 1975 through 1979 this is the period over which the trade act of 1974 was in force because the nature of these mechanisms is relatively unfamiliar a relatively large amount of institutional information is provided

the march of an economic idea protectionism isn t counter cyclic anymore conventional wisdom holds that protectionism is counter cyclic tariffs quotas and the like grow during recessions while that may have been a valid description of the data before the first world war it is now inaccurate since the second world war protectionism has not been counter cyclic tariffs and non tariff barriers simply do not rise systematically during downturns i document this new stylised fact with a panel of data covering over 180 countries and 40 years using over a dozen measures of protectionism and six of business cycles i test and reject a number of potential reasons why protectionism is no longer counter cyclic a diagnosis of exclusion leads me to believe that modern economics may well be responsible for the decline in protectionism s cyclic behaviour economists are more united in their disdain for protectionism than virtually any other concept this in turn leaves one optimistic that the level of protectionism will continue to decline along with its cyclicality andrew k rose

economic interests and voting on the omnibus trade bill of 1987 this paper presents an econometric analysis of the votes on five pivotal amendments to the omnibus foreign trade bills of the u s house and senate in 1987 probit estimation is used to identify the relationships between geographic variations in employment in trade sensitive industries and congressional voting on changes in foreign trade policy procedures the implied pattern of expected net benefits for the industries from the five amendments is highly consistent with qualitative evidence on the costs and benefits at stake two general conclusions stand out 1 procedural foreign trade policy proposals can have very specific beneficiaries 2 diffuse export interests can be influential in opposition to procedural protectionism

senate voting patterns on the 1991 extension of the fast track trade procedures prelude to nafta in 1991 then president george bush requested an extension of fast track procedures from congress for the primary purpose of negotiating a north american free trade agreement this paper uses an econometric model to test the importance of three themes related to nafta that surfaced during senate debates over whether to approve the request that of employment effects environmental effects and the impact on immigration from mexico the empirical results show that expected job gains and losses were significant in explaining senate voting patterns on fast track extension immigration was found to be somewhat important but environmental issues were not found to statistically significant in addition the impact of organized labor and political ideology as proxied by political party were found to be important factors that shaped senate voting patterns on fast track

collective labor supply and welfare the paper develops a general collective model of household labor supply in which agents are characterized by their own possibly altruistic preferences and household decisions are only assumed to be pareto efficient an alternative interpretation is that there are two stages in the internal decision process agents first share nonlabor income according to some given sharing rule then each one optimally chooses his or her own labor supply and consumption this setting is shown to generate testable restrictions on labor supplies moreover the observation of labor supply behavior is sufficient for recovering individual preferences and the sharing rule up to a constant finally the traditional tools of welfare analysis can be adapted to the new setting

toward a business cycle model of tariffs a modified interest group model links movements in tariffs to changes in the level of economic activity within nations this model is introduced and tested for tariff behavior in the 19th and early 20th centuries in three nations the united states great britain and germany empirical analysis lends strong support to the model s central thesis that tariffs are sensitive to movements within a business cycle tariff changes occurring in the three nations with the exception of british tariff increases generally conform to the expectations of the model furthermore business cycle sensitivity provides an explanation of the behavior of tariffs superior to two prominent alternatives those based on ideology and on hegemonic stability

gender power fertility and family policy the birth of children often shifts the balance of power within a family if family decisions are made according to the welfare function of the spouses this shift in power might cause a time consistency problem in a model of cooperative family decision making we show that this problem can lead to a systematic downward bias in fertility by keeping fertility low spouses mitigate the ex ante undesired shift in the balance of power that results from the presence of children this provides scope for welfare enhancing policy intervention we discuss to what extent existing family policy measures are suitable for overcoming the bias

gender agricultural production and the theory of the household virtually all models of the household assume that the allocation of resources is pareto efficient within many african households agricultural production occurs on many plots controlled by different members of the household pareto efficiency implies that factors should be allocated efficiently across these plots i find in contrast that plots controlled by women are farmed much less intensively than similar plots within the household controlled by men the estimates imply that about 6 percent of output is lost because of inefficient factor allocation within the household the paper suggests a new approach to modeling intrahousehold allocation consistent with the empirical results

trade and the variety of democratic institutions students of comparative politics have long acknowledged the importance of such institutional factors as electoral systems parliamentary versus presidential rule and the strength of parties but they have either regarded the institutions as given or have explained them entirely in domestic terms associating proportional representation for example with the intensity of social cleavages in economically advanced democracies however these institutional aspects can be plausibly linked to dependence on trade proportional representation the parliamentary system strong parties and large electoral districts have survival value for developed democracies exposed to trade that the recently revived agitation for proportional representation in the united kingdom has been cast explicitly in terms of economic necessity and dependence on trade adds force to this argument and suggests the need for further historical research on other cases of institutional adaptation and change

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

noncooperative household demand we study noncooperative household models with two agents and several voluntarily contributed public goods deriving the counterpart to the slutsky matrix and demonstrating the nature of the deviation of its properties from those of a true slutsky matrix in the unitary model we provide results characterising both cases in which there are and are not jointly contributed public goods demand properties are contrasted with those for collective models and conclusions drawn regarding the possibility of empirically testing the collective model against noncooperative alternatives and the noncooperative model against a general alternative

some empirical evidence on rent seeking we tested for the capture of net gains by winners in rent seeking competitions using the most prominent announcements of government favors in the canadian economy over a twelve year period stockholders returns were not significantly different from zero one possible explanation is that government assists firms only when assistance creates political gains refusing to transfer economic rents to firms maximmizes the resources available to serve political purposes this kind of behavior by government officials would imply that government has market power which is consistent with several well known theories of government

marital division of labor with risk of divorce the role of voice enforcement of contracts it is assumed that emotional ties can be relied on to enforce implicit marital contracts by voice therefore in the present model divorce has economic consequences not only because the economies of scale from living together are destroyed but also because the scope for such voice enforcement is weakened moreover perhaps surprisingly i find that it is ambiguous how an increase in the probability of divorce influences predivorce allocation of time even when preferences are assumed to be homothetic

pensions and fertility incentives this paper discusses the welfare implications of a pay as you go pension reform by introducing a child benefit in an endogenous fertility setting in the model of a small open economy higher fertility is associated with a reduction of lifetime labour supply the optimum share of fertility related pensions is always below unity but generally positive the former is true since individuals do not take into account the impact of their labour supply choice on the parent generation it is demonstrated that child allowances are equivalent to fertility related pensions as instruments to achieve the optimum allocation

household bargaining over fertility theory and evidence from malaysia we develop and test a model of household bargaining over fertility when transfers between spouses are possible the model makes precise how the fertility preferences of each spouse translate into fertility outcomes we show this depends on whether or not spouses can commit to their future actions within marriage if couples bargain with commitment fertility outcomes take account of both spouses fertility preferences and do not depend on the threat point in marital bargaining if couples bargain without commitment the influence of each spouse s fertility preference on fertility outcomes depends on the relevant threat point in marital bargaining and the distribution of bargaining power we test the models using household data from the malaysia family life survey this data set contains information on each spouse s desired fertility level as well as fertility outcomes we exploit differences in threat points in marital bargaining across ethnic groups to help identify the underlying bargaining model the evidence suggests couples bargain without commitment

the limits of international organization systematic failure in the management of international relations contributors to the literature on international organization io have traditionally been overly optimistic about the ability of multilateral management to stabilize in ternational relations and have tended to ignore the destabilizing effects of io while recent revisionist scholarship has acknowledged both the potential for organizational failure and the conditionality of management it has tended to focus on how io fails within specific issue areas and institutions this article offers a typology of the inherent systematic failures of io across issue areas and institutions and thereby seeks to bridge the gaps in our understanding of why many different institutions and managerial schemes have adverse effects it argues that io is prone to failure 1 when it attempts to manage complex tightly coupled systems of relations and issues 2 when it serves as a substitute either for more substantive and long term resolutions to international problems or for responsible domestic or foreign policy 3 when it intensifies international disputes and 4 when it generates moral hazard in offering a general theoretical approach to understanding the destabilizing effects of io the analysis is intended to serve both as a focal point for understanding critical approaches to the study of io and as an alternative rationale for eliminating the excesses of multilateral management

political interaction in the senate estimating a political spatial weights matrix and an application to lobbying behavior many motivations exist that cause legislators to behave strategically when voting these include logrolling towing the party line or political favor trading however it has proven difficult in the existing literature to uncover the magnitude of the interaction among politicians this paper takes a spatial approach to the problem using a spatial autoregressive model to not only uncover the magnitude of interactions but also the direction of the interactions in contrast to most applications of spatial econometrics i allow the elements of the spatial weights matrix to be estimated as parameters the political spatial weights matrix is calculated for 96 senators in the 110th u s congress furthermore in a marginal effects simulation i calculate the overall effect on voting from flipping a senator s vote allowing flipped votes to have a cascading effect i apply these measures to study political fundraising mildly suggesting that political interest groups direct donations to senators with the most influence

voting for protection an electoral model of tariff policy politicians want to please their constituents and will attempt to manipulate trade policy to further this goal this article elaborates a model of the electoral incidence across congressional districts of the interindustry structure of tariff protection with an application to the mckinley tariff of 1890 it may contribute to a neglected area of research on the domestic politics of tariffs to the history of a period of tariff formation in which there has been little recent work and to the debate over legislative representation of constituency interests models of the domestic political market for trade policy endogenous tariff theory can be divided into four categories with classification based on whether they are formal or empirical and on whether they focus on the demand or the supply side of the political market many of the formal models are too abstract to produce readily testable propositions 1 wolfgang mayer s model for example assumes that tariffs are set by a national popular referendum and deduces tariff structures from median voter results 2 there is no government in this type of model the demanders and suppliers of policy are the same william brock and stephen magee s model assumes a singleissue election in which politicians bid for votes by offering tariff protection up to the point at which marginal gains votes plus campaign contributions equal marginal costs lost votes plus lost contributions 3

free trade fair trade strategic trade and protectionism in the u s congress 1987 88 what conditions led the one hundredth congress of the united states to enact fair trade and strategic trade policies into law during 1987 88 political partisanship is an important force with democrats supporting and republicans opposing all types of trade intervention otherwise the coalitions of support for and opposition to the various trade policies differ particularly in the senate in that body international business is associated with support for fair trade policies and with opposition to classical protectionism while domestic u s business is associated with support for classical protectionism liberalism is strongly associated with support for fair and strategic trade policies but is not associated with classical protectionism in the house of representatives the long standing protectionist coalition remains an influence few forces in support of free trade remain in u s politics changing international market conditions rapidly affect the making of u s trade policy

the textile bill of 1985 the determinants of congressional voting patterns the following tables show the results of the probit analysis for the senate and the house a table including results for different combinations of the independent variables is included in an unpublished appendix available from the authors upon request the results of the probit analysis for the senate are shown in table 1 all the variables except exp had the expected signs however the results indicate that the two other employment variables and party affiliation are the only factors which we can say with confidence influenced a senator s decision to vote for or against this bill the coefficients reported and labeled der of prob measure the derivative of the probability of a yes vote evaluated at the means of the independent variables in question thus for example the coefficient for unemp in the top line of table 1 should be interpreted as indicating that a one percentage point increase in a state s unemployment rate will cause a 5 89 increase in the probability that the senator will vote for the bill the result for dr the party of the senator shows that in general democrats are more apt to vote for protectionist policies than are republicans this is consistant with president reagan s negative stand on the bill and his threat to veto it should it pass the amendment in question passed the senate on 24 october 1985 by a vote of 54 for to 42 against but the bill it was attached to has been postponed indefinitely the house bill which was passed on 10 october 1985 by a vote of 262 for to 159 against was vetoed by reagan on 17 december 1985 the results of the probit analysis for the house of representatives are shown in table 2 state employment data was used for the house as opposed to data for each voting district this was done for three reasons first employment data is usually reported by state or by county since counties are often divided by congressional district boundaries much personal judgement would be necessary to assign employment figures second the most recent county industry employment data is from 1981 while the data used in this analysis is from 1984 third we feel that in general logrolling is prevalent among a state s representatives for this bill the representatives from twenty six states voted as a block and in all but six states one third or less of that state s representatives voted contrary to the majority all of the probabilities are significant at the 05 confidence level representative s voting patterns are influenced by all of the included factors when unionization is added to the equation its coefficient is very small and negative although it is significant at the 05 confidence level one would expect more significance here since there are more degrees of freedom for the house analysis than for that of the senate when the data from the house and senate are pooled the results are similar to those of the house alone the null hypothesis that the data cannot be pooled was tested using a statistic with eight degrees of freedom 9 721 meaning that the null hypothesis is rejected as in the senate the state unemployment rate and the percent employed in textiles are important influences on the representative s vote and democrats in the house are more likely to vote for protectionist bills than republicans however unlike the senate the percent of a representative s campaign contributions that are donated by industry special interest groups has a significant effect on voting patterns although the point estimates for the magnitudes of the influence are very similar in both cases seventy four percent of the house received campaign contributions from these special interest groups while only 54 of the senate received contributions from these same sources this is probably because only one third of the senate was up for reelection during the time period considered while the entire house was in the process of campaigning for reelection exports also play a role in influencing the probability of a yes vote reducing this probability as employment in export industries increases but the magnitude of the coefficient is only 11 of that for textile employment the significance of this variable in the house is probably due to fear of retaliation expressed by both democrats and republicans this variable was not significant in the senate model most likely because the senate version excluded from the 1 import quota growth rate many countries who might have retaliated representatives appear to respond to a wider variety of constituent interests than do senators while senators voting patterns are only significantly influenced by their political affiliation their state s unemployment rate and the importance of textiles to their state the voting behavior of representatives is influenced by these factors as well as the importance of exports to their state and campaign contributions by textile special interest groups these results affirm the validity of the approach used by baldwin and coughlin they differ from baldwin who finds exports are not a significant influence on the house and from coughlin who does not include export employment as an explanitory variable or analyze the differences in voting patterns between the house and the senate

maximizing political efficiency via electoral cycles an optimal control model abstract the exchange between an elected politician such as a president prime minister or a local governor and interest groups is analyzed as an optimization problem the optimal control model shows the conditions required from regulatory policy and resource investment in order to maximize the politician s utility from the interest group s support given one interest group such a policy includes two time intervals well in advance of the elections the politician in office should invest a constant level of resources while for a certain period close to the elections the politician increases or decreases investment depending on the electoral significance of that interest group this proves that electoral cycles not only empirically exist but also maximize the politician s utility from interest groups support given several interest groups at each point in time the politician should invest in the group that contribute the most for his or her political interests

the botswana share market and its role in financial and economic development abstract emerging stock markets are increasingly playing an important role in the financial sectors of developing countries this paper examines the achievements of the botswana share market and finds that it has had a major impact on the portfolio composition of domestic institutional investors reducing their incentive to invest offshore but only a small impact on inflows of foreign investment the paper concludes that the share market is unlikely to provide a suitable means of raising new finance for companies in the manufacturing sector which have experienced the greatest problems in raising long term finance and where the government s economic diversification effort is concentrated

domestic content legislation house voting and the economic theory of regulation house voting on domestic content legislation provides a rare opportunity to examine the political economy of protectionism with respect to a particular issue rather than by using the traditional interindustry approach the results indicate that a representative s vote in favor of the content legislation and the intensity of the legislator s preferences are positively related to the importance of the auto and steel industries in the representative s district an increasing unemployment rate campaign contributions from labor groups affiliation with democratic party and a liberal ideology despite ideology s statistical significance the results suggest this variable can be disregarded because neither the predictive accuracy nor the explanatory power of the model is improved by its inclusion the estimates also provide insights concerning the impact of changes in the independent variables upon voting patterns

taxation and the political economy of the tariff traditional accounts of u s tariff policy emphasize trade strategies and interest group politics this article makes a departure it opens with an observation up until world war i the tariff was the largest single source of federal government revenues it then explores the significance of tariffs as taxes theoretically and empirically in its first part the article develops a theory of taxation politics and applies it to the tariff in its second part it submits the theory to an empirical test modeling changes in u s tariff rates from 1829 to 1940 the politics of tariff revision it argues followed from two characteristics of the tariff as tax from the extent of the treasury s dependence upon it and from the distributive pattern of its burdens and benefits taken together the article concludes revenue dependence and distributive incidence account for several diverse aspects of american tariff policy including the structure of its coalitions the shifts in its objectives and the timing of its innovations

a theory of political entrenchment can an incumbent political party increase its chances at re election by implementing inefficient policies that harm its constituency this paper studies the possibility of such a phenomenon which we label political entrenchment we use a two party dynamic model of redistribution with probabilistic voting political entrenchment by the left occurs only if incumbency rents are sufficiently high low skill citizens may vote for this party even though they rationally expect the adoption of these policies we discuss the possibility of entrenchment by the right the scope for commitment to avoid entrenchment policies and the effect of state capacity income inequality and party popularity on the likelihood of entrenchment we illustrate our theory with a number of historical examples

family policy with non cooperative families we consider a non cooperative model of a family s time allocation between market work and providing a home produced family public good such as child care or care for the elderly the model predicts underprovision of the public good because of crowding out this does not necessarily warrant public provision in contrast to other approaches in family economics we find that attempts to redistribute between spouses may alter the final distribution within the marriage and that such a policy may be pareto improving we also find that some degree of progressivity of the income tax can be welfare improving

stock markets in africa emerging lions or white elephants abstract the number of stock markets in african countries has doubled over the last 7 years although these markets remain small and illiquid they are growing rapidly and will become an increasingly important part of many african economies using examples taken from experience in other developing regions and africa s recent past this paper evaluates the common economic criticisms of stock markets and the political pitfalls involved in their operation it concludes that the positive economic effects of bourses on african economies are far larger than any negative effects and argues that the political costs can be mitigated while political benefits can also be gained it finishes by suggesting reforms that can be put in place to reap more benefits and further reduce costs from stock markets on the continent

transfers to families with children as a principal agent problem abstract the relationship between government and parents is modelled as a principal agent problem with the former in the role of principal and the latter in that of agents we make four major points the first is that if the well being of the child depends not only on luck but also on parental actions that the government cannot readily observe the latter can influence parental behaviour by conditioning income transfers to families on child performance the second point is that if there are market inputs into the making of a happy or successful child which the government can observe but not ascribe to any particular parent or child because they are bought anonymously an income transfer policy can be usefully complemented by an indirect subsidy on the price of these inputs the third is that if parents care about their children incentive considerations may have to be tempered by the need to compensate those who have the misfortune of getting a child with low ability the fourth is that parents can be induced to have the socially desirable number of children by making the transfer conditional not only on child performance but also on number of children ways of making these findings operational and the effects of administrative costs are discussed in some detail