financial crises unconventional monetary policy exit strategies and agents expectations a central bank may purchase assets during a financial crisis and then exit from those purchases agents have rational expectations about financial crises as rare events the probability the central bank purchases assets and the exit strategy selling off assets quickly produces a double dip recession while slowly unwinding generates a smooth recovery expectations about the exit strategy influence the initial effectiveness of purchases increasing the probability of purchases during crises distorts the pre crisis economy and depends upon the exit strategy the welfare benefits of unconventional policy may differ ex ante versus ex post as can the preferred exit strategy

trade disputes and the implementation of protection under the gatt an empirical assessment abstract this paper is a first attempt to empirically determine why countries choose to violate or adhere to gatt rules when making trade policy adjustments between negotiating rounds we use a previously unexploited set of data in which countries implemented two types of protection under the gatt system between 1973 and 1994 i legal protection in which countries utilized the gatt s safeguards provisions and ii illegal protection in which the protection was provided outside of the safeguards provisions resulting in a formal trade dispute we find substantial evidence that concerns for retaliation affect government policy decisions in ways which contribute to the explanation of the existence of trade disputes

the role of multilateral institutions in international trade cooperation the world trade organization wfo lacks the power to directly enforce agreements it is therefore important to understand what role the wto can play to facilitate international cooperation and whether a multilateral institution can offer distinct advantages over a web of bilateral agreements this paper examines two potential benefits of a multilateral trade institution first verifying violations of the agreements and informing third parties thus facilitating multilateral reputation mechanisms second promoting multilateral trade negotiations rather than a web of bilateral negotiations the model suggests that a multilateral approach is particularly important when there are strong imbalances in bilateral trading relationships

the economics of investor protection isds versus national treatment abstract investor state dispute settlements isds are supposed to protect foreign investors against domestic policies causing unjustified harm this paper scrutinizes the effects of isds and national treatment provisions in a two period model where foreign investment is subject to a hold up problem it shows that isds may increase welfare but comes with additional regulatory distortions in the first period a national treatment provision avoids these regulatory distortions but implies entry distortions because it makes the hold up problem also apply to domestic firms if the domestic regulatory framework applies to many domestic firms a national treatment provision welfare dominates isds

legislated protection and the world trade organization tariff bindings and administered protection are two characteristics of the world trade organization wto that are little understood tariff bindings place a ceiling on tariffs that is not always reached whereas administered protection provides all industries with some minimum import protection effectively creating a floor for protection how do these policies affect applied most favored nation mfn tariff rates that are enacted through the legislature i model tariffs determined by a dynamic legislative process and show that low applied mfn tariffs are less likely with tariff bindings and more likely with administered protection than under purely legislated protection

trade liberalization antidumping and safeguards evidence from india s tariff reform abstract this paper is the first to use product level data to examine empirically whether countries use antidumping and safeguard exceptions to unwind commitments to lower tariffs in the face of domestic political economic pressure we focus on the case of india a country that underwent a major exogenous tariff reform program in the early 1990s and subsequently initiated substantial use of safeguard and antidumping import restrictions we first estimate structural determinants of india s import protection using the grossman and helpman 1994 model and provide evidence from its pre reform tariff data of 1990 that is consistent with the theory we then re estimate the model on the indian tariff data after the trade liberalization is complete and find that the model no longer fits a result consistent with theory and evidence provided in other settings that india s 1991 1992 imf arrangement can be interpreted as resulting in an exogenous shock to india s tariff policy however when we re estimate the model on data from 2000 2002 that more completely reflects india s cross product variation in import protection by including both its post reform tariffs and its additional non tariff barriers of antidumping and safeguard import protection the significance of the grossman and helpman model determinant estimates is restored we interpret these combined results as evidence that india unwound its commitment to reduce tariffs through use of antidumping and safeguard protection in the face of political economic pressure the estimates are also economically important and provide one explanation for separate results in the literature that the magnitude of import reduction associated with india s use of antidumping is similar to the initial import expansion associated with its tariff reform finally we interpret the implications of our results for the burgeoning research literature examining the effects of liberalization on india s micro level development

what has and has not been learned about monetary policy in a low inflation environment a review of the 2000s as the world economy recovers from the worst financial crisis and most severe global slump in 75 years policymakers regulators and academics are focusing intensely and appropriately on lessons to be learned for monetary policy there are certainly many questions to answer among the most important are are inflation expectations well anchored what if any influence should asset quantities and prices have on monetary policy do we have sufficient confidence in our alternative monetary policy tools to stabilize the economy at the zero lower bound

network externalities discrete demand shifts and submarginal cost pricing the introduction of a new product often causes a massive discrete demand shift to the new product this study demonstrates that if a large scale demand shift to a new product is accompanied by network externalities it may result in submarginal cost pricing by which the seller sets its price below the marginal cost this finding casts new light on dumping and safeguard issues in the real world jel classification d42 externalites de reseaux deplacements discrets de la demande et tarification en deca du cout marginal l introduction d un nouveau produit engendre souvent un deplacement massif discret de la demande vers le nouveau produit cette etude montre que si un tel deplacement de la demande est accompagne d externalites de reseaux il peut s ensuivre une tarification en deca du cout marginal ou le vendeur fixe son prix en dessous du cout marginal ce resultat jette une lumiere nouvelle sur les problemes de dumping et de protection dans le monde reel

negative interest rate policy and the yield curve we evaluate the implications of the ecb s negative interest rate policy nirp on the yield curve to capture various shapes of the short end of the yield curve induced by the nirp we introduce two policy indicators which summarize the immediate and longer horizon future monetary policy stances we find the four nirp events lowered the short term interest rate by the same amount the impact is dampened at longer maturities for the first two event dates due to lack of forward guidance in contrast in the last two dates forward guidance drives the largest effects in two years

are supply shocks contractionary at the zlb evidence from utilization adjusted tfp data abstract the basic new keynesian model predicts that positive supply shocks are less expansionary at the zero lower bound zlb compared to periods of active monetary policy we test this prediction empirically using fernald s 2014 utilization adjusted total factor productivity series which we take as a measure of exogenous productivity in contrast to the predictions of the model positive productivity shocks are estimated to be more expansionary at the zlb compared to normal times we find that there is no significant difference in the response of expected inflation to a productivity shock at the zlb compared to normal times

is the wto passe the wto has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements ptas should economists see this as an efficient institutional hand off where the wto has carried trade liberalization as far as it can manage and is now passing the baton to ptas to finish the job this paper surveys a growing economics literature on international trade agreements and argues on this basis that the wto is not passe rather and subject to some caveats this survey of research to date suggests that the wto warrants strong support while a more cautious view of ptas seems appropriate

monetary policy trend inflation and the great moderation an alternative interpretation with positive trend inflation the taylor principle does not guarantee a determinate equilibrium we provide new theoretical results on determinacy in new keynesian models with positive trend inflation and new empirical findings on the federal reserve s reaction function before and after the volcker disinflation to find that i while the fed likely satisfied the taylor principle before volcker the us economy was still subject to self fulfilling fluctuations in the 1970s ii the us economy switched to determinacy during the volcker disinflation and iii the switch reflected changes in the fed s response to macroeconomic variables and the decline in trend inflation jel e12 e23 e31 e32 e52

false friends empirical evidence on trade policy substitution in regional trade agreements in this paper we examine the interplay of regional economic integration and the use of bilateral antidumping ad measures our empirical analysis brings three central findings to light i we find that regional trade agreements rtas generally reduce the likelihood of ad activity among integration partners ii in addition an improvement in the tariff treatment between trading partners regardless of whether expressed as the directly faced tariff or as a tariff margin generally leads to a lower likelihood of bilateral ad and iii regarding the interaction of both events however a reciprocally higher tariff margin between integration partners leads to a higher likelihood of bilateral ad than an equal tariff margin among non integration trading partners the latter effect seems to be primarily driven by those rtas with a participation of south countries

anti dumping what are the numbers to discuss at doha while tariff barriers have decreased worldwide through various gatt rounds anti dumping has surged to play a crucial role as the most important non tariff barrier after much debate and opposition anti dumping is on the agenda of the doha round of multilateral trade negotiations and it is one of the most important issues especially for developing countries as they are the main targets of this policy instrument with this prospect it is important to assess the relevance of anti dumping not only by focusing on traditional users but by analysing the experience of new users which are now major players in the field this paper improves upon existing studies by providing a comprehensive assessment on the use of anti dumping first data on the time pattern of worldwide implementations of anti dumping laws are presented this time profile shows interesting relationships with legal developments in gatt and wto dispositions second usual sources of data are complemented with various other sources this allows the inclusion of recent heavy users like china russia taiwan and ukraine which are ignored in similar studies but important for their trade volumes this enlarged and updated dataset shows that new users are even more important than previously thought with implications for the doha negotiations

ec trade protection law produmping or antidumping this paper argues that the anticipation of protection can have astimulating effect on exports instead of the commonly claimed effect of harassment if protection serves market cartelization by fixing export quantities or prices exporters may have an incentive to increase their sales abroad in order to secure a large share of the expected rent which is brought about by the anticipated import restriction this may even result in sales below marginal costs or dumping the effect of the protectionist threat may then be the reverse of what is intended it can raise the speed of import penetration and it can provoke dumping a formal model and a supportive institutional analysis of ec trade protection is supplemented by preliminary empirical evidence

the power of forward guidance revisited in recent years central banks have increasingly turned to forward guidance as a central tool of monetary policy especially as interest rates around the world have hit the zero lower bound standard monetary models imply that far future forward guidance is extremely powerful promises about far future interest rates have huge effects on current economic outcomes and these effects grow with the horizon of the forward guidance we show that the power of forward guidance is highly sensitive to the assumption of complete markets if agents face uninsurable income risk and borrowing constraints a precautionary savings effect tempers their responses to changes in future interest rates as a consequence forward guidance has substantially less power to stimulate the economy in addition we show that the business cycle dynamics of our incomplete markets model differ substantially from its complete market counterpart this contrasts with the well known results of krusell and smith 1998 we present approximate representations that can easily be incorporated into standard business cycle models

occbin a toolkit for solving dynamic models with occasionally binding constraints easily abstract the toolkit adapts a first order perturbation approach and applies it in a piecewise fashion to solve dynamic models with occasionally binding constraints our examples include a real business cycle model with a constraint on the level of investment and a new keynesian model subject to the zero lower bound on nominal interest rates compared with a high quality numerical solution the piecewise linear perturbation method can adequately capture key properties of the models we consider a key advantage of the piecewise linear perturbation method is its applicability to models with a large number of state variables

outside the box unconventional monetary policy in the great recession and beyond this paper provides an overview of unconventional monetary policy as implemented by the u s federal reserve after the global financial crisis first it reviews the key features of the fed s quantitative easing and forward guidance policies second it discusses the mechanisms through which the two policies may have affected financial markets institutions and the overall economy third it surveys the evidence on the policies financial and economic impacts fourth it considers some of the policies unintended side effects the paper concludes with some thoughts on how unconventional monetary policy might be used in the future

2004 trade policy review the united states many of the findings of the seventh trade policy review of the united states are similar to those reached in earlier reviews the us is unanimously acknowledged as having an open and transparent system the us economy has remained amongst the world s most competitive and has continued to support global growth by keeping its import market largely open this review finds however that the us has developed a disturbing pattern of non compliance with wto rules during the period of review the united states enacted policies most notably the infamous byrd amendment and the 2001 02 steel safeguard action that were found to be clear violations of its wto obligations despite these and other such findings the united states has obstinately refused to bring its domestic statutes in line with wto rules in addition in recent years the united states aggressive pursuit of regional and bilateral initiatives has led many members to question whether the united states is committed to the multilateral approach espoused by the wto overall despite the us s many virtues member countries expressed concern that the us s stated leadership of and commitment to the wto is not matched by its actions

ordering quantity decisions considering uncertainty in supply chain logistics operations abstract this research seeks to determine the optimal order amount for a retailer given uncertainty in a supply chain s logistics network due to unforeseeable disruption or various types of defects e g shipping damage missing parts and misplacing products mixture distribution models characterize problems from solitary failures and contingent events causing network to function ineffectively the uncertainty in the number of good products successfully reaching distribution centers dcs and retail stores poses a challenge in deciding product order amounts because the commonly used ordering plan developed for maximizing expected profits does not allow retailers to address concerns about contingencies this research proposes two improved procedures with risk averse characteristics towards low probability and high impact events several examples illustrate the impact of a dc s operation policies and model assumptions on a retailer s product ordering plan and resulting sales profit

non equivalent pass through of anti dumping duties countervailing duties and import tariffs we directly compare the short run pass through of tariffs anti dumping ad duties and countervailing cv duties into us import prices consistent with the theoretical predictions we find clear pattern of non equivalence in import price reaction to the three duty types with the most notable difference detected between ad duties and tariffs according to our estimates a tariff rate would have to be approximately two times higher than an ad duty rate in order to have the same effect on the delivered import price

the continued dumping and subsidy offset act an economic analysis under the continued dumping and subsidy offset act cdsoa of 2000 the u s government distributes the revenue from anti dumping and countervailing duties to domestic firms alleging harm in this article we develop a simple model to examine the economic effect of the cdsoa for the case in which the offset payments to domestic firms are linked to the volume of foreign imports the cdsoa may increase foreign imports when the domestic market is more competitive than in the cournot equilibrium this finding runs contrary to what the e u and some exporting countries have claimed but if the market is less competitive than in cournot the cdsoa becomes an instrument of trade protectionism

safeguards and retaliatory threats abstract this is the first empirical article to analyze the response of shareholders to the threat of retaliatory tariffs authorized by the world trade organization wto we use event study methodology to gauge the impact of european union eu retaliatory threats stemming from the 2002 imposition of u s steel safeguards results indicate that the u s stock returns of firms slated for wto authorized tariffs reacted negatively to the announcements signaling an increased likelihood of retaliation shareholders also generally responded positively to the early cancellation of the safeguards which removed the risk of retaliation industry level analysis indicates that producers of apparel tobacco and transportation equipment were particularly affected by the threat of retaliatory tariffs second stage estimates suggest that retaliatory threats have a more negative impact on firms with a higher export share to the eu greater profit growth and low research and development intensity

global effective lower bound and unconventional monetary policy abstract in a standard open economy new keynesian model the effective lower bound causes anomalies output and terms of trade respond to a supply shock in the opposite direction compared to normal times we introduce a tractable framework to accommodate for unconventional monetary policy in our model these anomalies disappear we allow unconventional policy to be partially active and asymmetric between countries empirically we find the us euro area and uk have implemented a considerable amount of unconventional monetary policy the us follows the historical taylor rule whereas the others have done less compared to normal times

anticipatory effects of voluntary export restraints a study of home video cassette recorders market 1978 86 abstract this paper investigates the impact of voluntary export restraints vers at the pre implementation stage when exporters have a good prospect for the vers distinctive features of the vcr market in 1978 86 provide a testable hypothesis to analyze the effect of the ec japan vers which were implemented in the fiscal years of 1983 85 the paper finds consistent evidence that the vers affected firms pricing behavior in the u s market prior to the ver period as a result of japanese exporters anticipation of the vers

evaluating central banks tool kit past present and future abstract we develop a structural dsge model to systematically study the principal tools of unconventional monetary policy quantitative easing qe forward guidance and negative interest rate policy nirp as well as the interactions between them to generate the same output response the requisite nirp and forward guidance interventions are twice as large as a conventional policy shock which seems implausible in practice in contrast qe via an endogenous feedback rule can alleviate the constraints on conventional policy posed by the zero lower bound quantitatively qe1 qe3 can account for two thirds of the observed decline in the shadow federal funds rate in spite of its usefulness qe does not come without cost a large balance sheet has consequences for different normalization plans the efficacy of nirp and the effective lower bound on the policy rate

anti dumping use and its effect on trade liberalisation evidence for the european union in this paper we examine the hypothesis that anti dumping actions may contribute to trade liberalisation by serving as a safety valve for protection seeking pressures using microlevel trade and tariff data at the hs 8 digit level for the european union we investigate whether the use of anti dumping measures has acted as a catalyst in subsequent multilateral tariff negotiations our findings suggest that anti dumping policies may have reduced the resistance of domestic protectionist forces towards major tariff reforms as they show significantly larger tariff cuts for products previously involved in an anti dumping investigation

2018 wto trade policy review of malaysia this paper presents an academic analysis and review of the recently completed wto trade policy review tpr of malaysia 2018 this includes suggesting policies that can help to promote malaysia s international competitiveness we show that the sharp decline in commodity prices that started in 2014 contributed in narrowing malaysia s trade balance and current account balance as a share of gdp the faster decline of exports as a share of gdp compared to imports accounted for most of the substantial reduction further the collapse of commodity prices was accompanied by a sharp depreciation of ringgit malaysia we also show that malaysia is losing international attractiveness in terms of fdi inflows relative to its economic size this is evidenced by the downward trend in malaysia s fdi performance index since 1992 further international tourism has fallen on average since 2014 due largely to a drop in tourist arrivals from singapore policymakers should introduce policies to enhance international competitiveness such as reforming the education system to produce skilled workers and reducing reliance on low skilled foreign workers

antidumping law as a collusive device in the united states many antidumping petitions are withdrawn before the investigations are completed prusa 1992 argues that petitions are used by domestic industries to induce foreign industries into collusive agreements in his model all antidumping petitions should be withdrawn which is not the case this paper provides a model in which only some petitions are withdrawn withdrawal depends on two key parameters coordination cost and bargaining power of domestic and foreign industries a new data set is constructed to test the model on the u s experience for the period 1980 97 the econometric analysis supports the theoretical conclusions of the model

speed limit policies the output gap and optimal monetary policy in a standard new keynesian model a myopic central bank concerned with stabilizing inflation and changes in the output gap will implement a policy under discretion that replicates the optimal timeless perspective precommitment policy by stabilizing output gap changes the central bank imparts inertia into output and inflation that is absent under pure discretion even a fully optimizing i e non myopic central bank operating in a discretionary policy environment achieves better social outcomes if it focuses on inflation and changes in the output gap than are achieved under inflation targeting this abstract was borrowed from another version of this item

domino dumping i competitive exporters when exporting firms face the prospect of voluntary export restraints they have an incentive to export more than with no prospect of a voluntary export restraint since greater exports lead to larger license allocations in the event of a voluntary export restraint export country governments incentives differ leading either to export tax or subsidy depending on the circumstances the prospect of one departure from free trade thus leads to another a domino effect antidumping enforcement will ordinarily not eliminate and ironically may increase dumping copyright 1992 by american economic association

the first review of european union antidumping reviews the literature on antidumping ad has documented various aspects of this protectionist tool however a peculiar feature of ad has not received much attention these measures are endogenous to the behaviour of the exporting firms which can adjust the dumping margin by changing their export price and ask the authority to amend the ad measures accordingly the objective of this paper is to fill part of this gap in the literature by analysing the ad reviews conducted by the european union for affirmative petitions initiated in 1980 2009 to this end a novel data set of all such reviews has been assembled summary statistics reveal that more than a third of all petitions concluded with the imposition of ad measures are reviewed at least once before their expiration and most reviews lead to lower ad duties although almost 20 per cent of the firms investigated through interim reviews see their duties increase there are significant differences in the outcome of the reviews depending on the party requesting them i e reviews lodged by european producers are less likely to lead to lower duties these conclusions are confirmed by the econometric analysis which also shows that chinese firms see their duties reduced significantly less than those of firms from other countries

does flexibility promote cooperation an application to the global trade regime do flexibility provisions in international agreements clauses allow ing for legal suspension of concessions without abrogating the treaty promote coop eration recent work emphasizes that provisions for relaxing treaty commitments can ironically make states more likely to form agreements and make deeper conces sions when doing so this argument has particularly been applied to the global trade regime the general agreement on tariffs and trade gatt and its successor the world trade organization wto yet the field has not produced much evidence bearing on this claim our article applies this claim to the global trade regime and its chief flexibility provision antidumping in contrast to prior work this article explic itly models the endogeneity and selection processes envisioned by the theory we find that states joining the wto are more likely to adopt domestic antidumping mech anisms likewise corrected for endogeneity states able to take advantage of the regime s principal flexibility provision by having a domestic antidumping mecha nism in place are significantly more likely to 1 join the wto 2 agree to more tightly binding tariff commitments and 3 implement lower applied tariffs as well

has the byrd amendment affected us imports the continued dumping and subsidy offset act cdsoa also known as the byrd amendment allows the u s government to distribute revenues from antidumping duties to domestic firms alleging harm prior to the amendment these revenues were not distributed to firms in this article we formally test the hypothesis that the byrd amendment effectively provides double protection to u s firms to the extent that it further restricts u s imports as argued by the e u and eleven other u s trading partners using a rich panel of 362 u s manufacturing industries for the period 1998 to 2003 we find that whether or not the byrd amendment restricted u s imports depends crucially on the level of competitiveness in the import competing industry specifically we find that the byrd amendment served to restrict imports only in industries where competition is relatively weak while the amendment is associated with an increase in imports in more competitive industries

eu anti dumping and tariff cuts trade policy substitution the world trading system in its current form aims at reducing multilateral trade barriers across the board indeed the last successfully concluded multilateral trade negotiations led to substantial tariff concessions on the part of most developed economies what however happened to other forms of import protection have substantial tariff concessions subsequently been replaced by the use of alternative forms of import protection in this paper we empirically investigate the relationship between negotiated external tariff cuts and the subsequent use of anti dumping actions by the eu evidence is found for larger uruguay round tariff cuts increasing the probability of subsequent anti dumping investigations

vers and expectations extensions and evidence this paper analyses the effects of an expected future voluntary export restraint on the level of firms current exports to a market the traditional result that current exports increase is shown to depend on the degree of collusion in the exporting industry and the anticipated restrictiveness of the ver the former relationship is tested by reference to the effect of ec import surveillance on its imports surveillance is argued to indicate an increased probability of a ver in the future and it is found that while competitive industries respond to it by increasing exports to the ec less competitive ones curtail exports this constitutes one of the few empirical tests of the strategic part of strategic trade policy

optimal simple and implementable monetary and fiscal rules welfare maximizing monetary and fiscal policy rules are studied in a model with sticky prices money and distortionary taxation the ramsey optimal policy is used as a point of comparison the main findings are the size of the inflation coefficient in the interest rate rule plays a minor role for welfare it matters only insofar as it affects the determinacy of equilibrium optimal monetary policy features a muted response to output interest rate rules that feature a positive response to output can lead to significant welfare losses the welfare gains from interest rate smoothing are negligible optimal fiscal policy is passive the optimal monetary and fiscal rule combination attains virtually the same level of welfare as the ramsey optimal policy

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

monetary policy expectations at the zero lower bound we show that conventional dynamic term structure models dtsms estimated on recent u s data severely violate the zero lower bound zlb on nominal interest rates and deliver poor forecasts of future short rates in contrast shadow rate dtsms account for the zlb by construction capture the resulting distributional asymmetry of future short rates and achieve good forecast performance these models provide more accurate estimates of the most likely path for future monetary policy including the timing of policy liftoff from the zlb and the pace of subsequent policy tightening we also demonstrate the benefits of including macroeconomic factors in a shadow rate dtsm when yields are constrained near the zlb

fiscal requirements for price stability maintaining price stability requires not only commitment to an appropriate monetary policy rule but an appropriate scal policy rule as well ricardian equivalence does not imply that scal policy is irrelevant except in the case of a certain class of policies ricardian policies the role of scal developments in inflation determination under a non ricardian regime is illustrated through an analysis of the bond price support regime of the 1940s a monetary scal regime with attractive properties would combine a taylor rule for monetary policy with nominal decit targeting as a scal policy commitment

trade diversion from tomato suspension agreements trade barriers can cause output to be diverted to other countries and into other products we study the effect of a voluntary price restraint vpr on mexican tomatoes entering the united states the diversion caused by the vpr is statistically and economically significant representing over four fifths of the direct effects of the trade barrier when the vpr was binding mexico exported more tomatoes to canada the united states cut back on exports while canada increased their exports to the united states the vpr also diverted fresh tomatoes in mexico into paste production which was then exported to the united states des barrieres commerciales peuvent entrainer la diversion de l output vers d autres pays ou d autres productions on etudie la diversion causee par les accords de restriction volontaire des prix arvp des tomates mexicaines entrant sur le marche americain la diversion causee par les arvp a ete statistiquement et economiquement significative representant plus des quatre cinquiemes des effets directs de la barriere tarifaire quand les arvp ont ete contraignants le mexique a exporte plus de tomates au canada les etats unis ont reduit leurs exportations alors que le canada augmentait ses exportations vers les etats unis les arvp ont aussi entraine une diversion des tomates fraiches au mexique vers la production de puree de tomate un produit qui a alors ete exporte vers les etats unis

the limits of forward guidance abstract the viability of forward guidance as a monetary policy tool depends on the horizon over which it can be communicated and its influence on expectations over that horizon this paper develops and estimates a model of imperfect central bank communications and uses it to measure how effectively the fed has managed expectations about future interest rates and the influence of its communications on macroeconomic outcomes standard models assume central banks have perfect control over expectations about the policy rate up to an arbitrarily long horizon and this is the source of the so called forward guidance puzzle our estimated model suggests that the fed has limited ability to affect expectations at horizons that are sufficiently long to give rise to the forward guidance puzzle additionally imperfect communication has a significant impact on the propagation of forward guidance finally we develop a novel decomposition of the response of the economy to forward guidance the decomposition shows that empirically plausible imperfect forward guidance has a quantitatively important role bringing forward the effects of future rate changes and that poor communications have been a source of macroeconomic volatility

optimal monetary policy and imperfect financial markets a case for negative nominal interest rates this article studies optimal monetary policy in a model with credit frictions and money demand we show that augmenting a standard new keynesian model with money demand and financial frictions generates a mechanism that in equilibrium gives rise to optimal negative nominal interest rates in addition we find that the tighter credit markets are the lower the optimal nominal policy interest rate and the more likely it is to be negative quantitatively when credit constraints are binding a standard calibration of the model generates an optimal nominal policy interest rate that is roughly 4 annually jel e31 e41 e43 e44 e52 e58

nontariff barriers and trade liberalization i introduction it is common to recognize that tariffs have gradually been replaced by nontariff barriers ntbs some authors go even further and argue there is a law of constant protection an expression used by bhagwati 1988 mainly to dismiss the idea baldwin 1984 600 for instance writes not only have these measures become more visible as tariffs have declined significantly through successive multilateral trade negotiations but they have been used more extensively by governments to attain the protectionist goals formerly achieved with tariffs the purpose of this article is to set up a model in which the effect of trade liberalization on the use of quotas and antidumping laws can be investigated directly we analyze two types of bilateral trade liberalization tariff reductions and quota elimination we show that our model is consistent with a progression from the use of tariffs only to the use of quotas following tariff liberalization to the use of antidumping laws when quotas have been jointly tarrified second it is also consistent with a narrowing of the range of industries in which each of these instruments is used third the extent of bilateral tariff liberalization and the ensuing degree of replacement of tariffs by ntbs depend on the combination of two industry specific characteristics the government s preferences for domestic firm profits and the importance of international transport cost in the industry overall our results suggest that treaties that remove or reduce one type of distortion may lead to the use of other policies tha t are even worse but despite the use of ntbs overall trade is more liberal to show these results we use a standard two country model with two way trade where the policy maker s objective function is quasi concave this last characteristic is important to explain some of the results as it leads to strategic complementarity in the tariff game and to the possibility of interior solutions in the quota game our results appear to track three separate sets of empirical facts well first evidence shows that there is a clear emergence of quantitative restrictions in the 1960s in manufacturing sectors and in developed economies followed by an explosion in the use of antidumping constraints since the 1980s 1 the emergence of these two ntbs can be linked to preceding multilateral trade rounds and in particular to the completion of the kennedy round today the general agreement on tariffs and trade gatt 1990 10 notes that despite a recent decline in the number of anti dumping investigations initiated in the united states and the european communities anti dumping remains after tariffs the most frequently invoked trade policies in these countries antidumping measures are also spreading to developing countries nogues 1993 quantitative restrictions are meanwhile on the decline as signatories of the uruguay round agreement are now required to tariffy existing quotas and constrain their future use gatt 1990 documents specific import quotas import licensing restrictions and items subject to import prohibition that have been eliminated in recent years second the gradual replacement of trade tools has also been accompanied by a reduction of the number of sectors affected by ntbs whereas very few products were traded without levy before the various gait rounds renner 1971 finds that 7 of the four digit product classes were affected by quantitative restrictions in the united states and in the european communities in 1970 the number of antidumping cases in the european communities initiated and or ending up with a positive decision represents a fraction of this number see gait 1993b mainly concentrated on a very small number of sectors see messerlin and reed 1995 of course it is not because a smaller number of sectors are affected by ntbs that overall protection necessarily decreases however given the high rates of growth in world trade it seems likely that despite this substitution the overall level of protection has decreased over time

rules or politics an empirical analysis of itc anti dumping decisions this research analyzes the international trade commission s anti dumping decisions from 1980 to 1986 the results suggest that commissioners use criteria consistent with the instructions set forth in u s legislation the analysis also indicates that political variables help predict commissioner decisions petitions involving senate oversight committee members constituencies may be systematically favored in the process evidence of possible bias toward less developed country exports is presented as well the methodology also yields estimates of commissioner specific fixed effects

antidumping investigations and the pass through of antidumping duties and exchange rates comment well in excess of 100 percent based on their understanding of the us antidumping calculation however the hypothesis is based on an incorrect understanding of the antidumping calculation under us law when corrected for this error the hypothesis would lead to a prediction of simple 100 percent pass through at most dumping refers to selling a product in an export market at less than its normal value a benchmark that is most commonly based on sales in the domestic market of the same product antidumping laws set tariffs to offset the amount of dumping the excess of normal value over export price in us practice a dumping complaint is brought on behalf of an industry against rival imports with the cases defined by product and by country a successful case results in the potential imposition of antidumping duties over and above any normal tariffs an unsuccessful case results in no duties being imposed american antidumping law and practice have the somewhat unusual characteristic that anti dumping duties are estimated and used to set duty deposits for a forward looking period in an initial investigation then are recalculated and actually assessed for the same period now back ward looking in a later review with some variation the later review is typically completed about two years after the initial investigation the review sets a new deposit rate and a second review determines the actual assessment rate retrospectively this can be repeated indefinitely the ini tial duty estimate resulting in a deposit rate allows companies to modify their pricing behavior so as to affect the actual dumping duties that are later assessed blonigen and haynes exploit this characteristic of the us administration of its antidump ing law to examine the effects of the imposition of antidumping duties on the pass through to us pricing the dumping investigation and resulting deposit rate provide information that the company can use in its subsequent sales in order to reduce or eliminate its dumping liability in the eventual review by comparing the antidumping deposit rates with eventual us pricing the degree of pass through of antidumping deposits can be estimated and the effects on exchange rate pass through of a potential antidumping dumping duty can be studied here i focus on the factual underpinnings that lead to blonigen and haynes s pricing model rather than the empirical results that model predicts that the method by which the us department of commerce usdoc calculates ad duties will lead to pass through of estimated antidump ing duties at twice the level of those estimated duties if companies wish to eliminate the eventual dumping duties by studying the outcomes of a series of ad cases concerning steel from canada they conclude that pass through of estimated duties exceeds 160 percent broadly consistent with

dumping and signaling abstract a model of predatory dumping based upon incomplete and asymmetric information is developed the foreign firm may induce exit by the home firm through acting like a low cost competitor irrespective of its actual costs the home firm must infer the foreign firm s cost through its export price by tying the export price to the price that the foreign firm charges in the foreign market a home county antidumping law raises the cost of signaling low production costs to the home producer the law has signal enhancing or inhibiting effects which may adversely affect the home firm with ambiguous welfare consequences

welfare costs of the u s antidumping and countervailing duty laws abstract the antidumping ad and countervailing duty cvd laws in the united states have become the most pervasive form of import relief sought by domestic producers this paper estimates the collective economic effect of the hundreds of active u s ad cvd orders using a computable general equilibrium model we estimate that the collective net economic welfare cost in 1993 of these orders to be 4 billion this welfare estimate is sensitive to various modeling assumptions which are explored in the paper with the implementation of the uruguay round agreements the ad cvd laws remain one of the costliest programs restraining u s trade

dynamic tariffs with asymmetric information recent developments in dynamic game theory are applied to determine when two countries can sustain freer trade given that they determine trade policies non cooperatively countries know their own level of protection but not the other country s level of protection using import trigger strategies cooperation in the form of low tariffs can be supported although there are periodic reversionary high tariff episodes however if terms of trade trigger strategies are used cooperation does not occur

extreme event risk management a review of lee b preston f 2012 preparing for high impact low probability events lessons from eyjafjallajőkull london chatham house abstract this paper provides a short communication based on a review of bernice lee and felix preston with gemma green 2012 this white paper received 36 survey responses from businesses related to the impact of the eyjafjallaj kull volcano most reported negative profit impacts although 47 reported that it took less than a week to return to normal operations this volcanic incident represents events that have significant impact on supply chains that have low enough rates of occurrence that they cannot be expected to be forecast therefore there is a great deal of value to put the organization in a position to adapt to whatever might occur and to have contingency plans in effect

dumping as a signal of innovation in the r d intensive industries where technologies change rapidly an innovative foreign firm may need to export greater than normal quantities to signal the level of the new technology it possesses we find that such actions lead to sales below cost if the foreign firm has a relatively poor reputation for innovation has a sufficiently high discount factor or possesses a new technology that significantly cuts its cost we also show that antidumping reduces the costs of signaling benefits the home firm and may raise the profit to the foreign firm in the pre duty period

foreign investment quotas and rent extraction under uncertainty abstract this study examines the effects of quantitative restrictions on foreign firms entry into a domestic industry foreign firms investment policy and the equilibrium value of their entry right are studied under various rationing and rent extracting schemes when foreign firms are left free to compete for the scarcity rents induced by a quota their policy exhibits a suboptimal rent run entry occurs at the optimal pace only until a threshold level of investment is reached the last group of firms enters early and dumps output at below marginal cost

trade diversion as firm adjustment to trade policy evidence from eu anti dumping duties on vietnamese footwear this paper evaluates the impact of the 2006 european union anti dumping ad action on vietnamese footwear in three markets imports to the eu footwear producers in vietnam and the trade diversionary adjustment of vietnamese firms in the us market we find that the ad action reduced vietnamese imports to the eu by as much as 65 per cent given that the eu makes up almost two thirds of vietnam s footwear exports and footwear is among the top four export industries for vietnam this reduction is economically significant consistent with predictions of our model we find evidence of trade diversion by vietnamese producers from the eu to the us market our difference in difference estimates of the ad actions on the value of vietnamese footwear imports to the united states ranged from 69 to 71 per cent over the period 2004 07 and 69 to 72 per cent in terms of quantity these results highlight the spillover effects of trade policy in third markets when firms adjust to trade barriers our results are robust to triple difference specifications where we adjust for trend differences and a series of placebo specifications

endogenous protection foreign direct investment and protection building trade abstract we introduce the possibility of foreign direct investment fdi in a strategic oligopolistic setting with endogenous protection and find that a number of unique subgame perfect equilibria may arise including a new result we call protection building trade this phenomenon occurs in our model when foreign firms locating production in the home country try to increase protectionist pressures in the home country through increased exports to provide larger barriers against other foreign competitors in future periods we discuss how the foreign firm behavior surrounding significant u s protectionist actions including the vers on japanese automobiles may be consistent with protection building trade behavior

cumulation and itc decision making the sum of the parts is greater than the whole in 1984 congress amended the antidumping and countervailing duty laws man dating that the international trade commission itc cumulate imports across countries when determining injury we estimate that cumulation increases the probability of an affirmative injury determination by 20 to 30 percent and has changed the itc s decision from negative to affirmative for about one third of cumulated cases we also show that the protective effect of cumulation increases as the number of countries involved increases holding import market share constant that is cumulated imports have a super additive effect on itc decision making

domino dumping ii anti dumping abstract domino dumping anderson american economic review 1992 82 65 83 arises when exporting firms dump to obtain more export licenses in the future when there is a positive probability of a future ver anti dumping policy may then be in the public interest for the importing country via lowering the probability of a ver increased enforcement may perversely lead to a rise in dumping also it may increase the probability of a ver and may reduce the probability of free trade it is possible for the public interest to require some enforcement however it is normally in the public interest to permit some dumping

dynamics and discriminatory import policy although the general agreement on trade and tariffs prohibits discriminatory import tariffs gatt rules include means by which this prohibition can be circumvented the previous literature use static models to show that discriminatory tariffs increase welfare in a dynamic model this is not necessarily true for example with consumer switching costs current market share is valuable in this case discriminatory tariffs are higher for firms with a higher market share in expectation of such policies firms price less aggressively if switching costs are significant relative to exporting country asymmetries then this adverse affect on incentives can result in lower importing country welfare this suggests that it might be in the interests of importers to abide by the gatt mfn principle

rationalizing agricultural export subsidies export subsidies are an important form of agricultural policy especially for large traders such as the united states and the european community a number of small countries also use export subsidies in effect e g saudi arabian wheat or canadian dairy products in that the domestic price is set well above world levels and surplus production is dumped onto the world market a number of recent contributions to trade theory have argued that export subsidies can be welfare enhancing for the subsidizing country and by implication that the policy choice is consistent with the hypothesis that a benevolent government is pursuing pareto efficiency in the present paper we examine these arguments and present an alternative explanation of export subsidies utilizing the concept of efficient redistribution becker gardner 1983 in standard trade models arguments in favor of global export subsidies arise from failure to exploit market power in another good itoh and kiyono feenstra itoh and kiyono use a threegood model to show that subsidies on marginal goods defined as goods not exported at all or exported in small quantities can increase welfare in the subsidizing country a subsidy on marginal goods causes their production to increase and the supply of nonmarginal goods to decrease thereby raising the price of the nonmarginal goods and increasing the exporter s terms of trade feenstra also employs a threegood model and demonstrates that it is possible for the pattern of substitutability and complementarity across goods to allow subsidies to increase welfare the necessary condition is that the subsidized export be a stronger substitute for another exported good or a stronger complement for an imported good in the subsidizing country than abroad the export subsidy increases welfare by improving the terms of trade in the other imported or exported good the distortion in feenstra s model is the failure to exploit market power in the second or third market as an alternative to global export subsidies abbott paarlberg and sharples aps have examined targeted export subsidies and found that in some circumstances they can be welfare improving dutton later showed the aps result arises because they first constrain the export tax to the rest of the world to be zero so that it becomes theoretically possible for the best export tax to the targeted country to be negative the aps result hinges on differences in import demand elasticities and the exporting country s use of market power in order to price discrim

an analysis of factors influencing the anti dumping behaviour in india the use of anti dumping measures as a trade protection tool has increased phenomenally during the last decade one significant aspect of this new trend is the increasing involvement of developing countries india is one such country which has emerged as a very frequent user of anti dumping measures surpassing even the traditional users it had initiated more than 300 anti dumping cases by the end of 2002 03 many of these cases are against developing countries most of the cases are concentrated in narrow range product groups like chemicals and petrochemicals iron and steel pharmaceuticals and textiles this study examines india s experience with anti dumping measures the main objective of the study is to identify the factors which might have influenced the anti dumping behaviour in india discussion of these factors shows that imports have increased considerably this is particularly true for a number of developing countries facing dumping charges in india at the same time many of the domestic producers of the like products have performed poorly during the last decade such trends may instigate the import competing industries to seek anti dumping protection and may also influence the authority to provide that however the results of our statistical exercise show that although imports and performance of the domestic industry might have influenced the initiation of anti dumping cases these factors did not seem to significantly influence the final decision of the authority the results rather indicated a tendency on the part of the authority to provide anti dumping protection to industries which are characterised by a large number of firms

voluntary export restraints and strategic technology transfers abstract this paper investigates the effects of voluntary export restraints vers in the presence of potential entrants and technology transfers it builds a model of a licensing game in a cournot oligopoly market and examines conditions under which vers induce restrained foreign firms to transfer technologies to potential suppliers i show that a ver can decrease the profit and output of the domestic incumbent by perturbing the no licensing equilibrium reached under free trade and inducing the market to move to a licensing equilibrium

cooperation in wto s tariff waters this paper examines the extent to which tariff cooperation is observed among world trade organization members with the help of a simple political economy model we show that tariffs are positively

antidumping and retaliation threats abstract we propose and test two ways in which retaliation threats may dampen the antidumping ad activity we observe first the threat of retaliatory ad actions may make a domestic industry less likely to name a foreign import source in an ad petition second the prospect of a gatt wto trade dispute may make government agencies less likely to rule positive in their ad decision using a nested logit framework we find evidence that both retaliation threats substantially affect us ad activity from 1980 through 1998

anti dumping a growing problem in international trade this paper discusses the issue of anti dumping ad proliferation ad is used more frequently by more countries and against more products than ever in its history i review ad filing patterns with an emphasis on the scope of countries and industries seeking protection recent trends suggest that the widespread embrace of ad protection makes the prospect for ad reform increasingly unlikely ad is no longer being used solely by high income developed countries it is increasingly being used by middle income and even lower income countries new users have chosen to use ad very intensively per dollar of imports the new users have filed ad cases up to 15 20 times more frequently than the traditional ad users such as the us and eu the evolving set of ad users complicates ad negotiations in the near term strong opposition by the us and eu makes reform a highly unlikely outcome in the longer run rising use of ad against the us and eu could conceivably weaken their support for ad yet the same trends that might finally cause the us and eu to realise ad is a failed policy will likely make reform impossible

sole versus dual sourcing in stochastic lead time s q inventory models when supply lead times are uncertain the simultaneous procurement from two sources offers savings in inventory holding and shortage costs economies are achieved if these savings outweigh the increase in ordering costs in this paper we analyze dual sourcing in the context of the reorder point order quantity inventory model with constant demand and stochastic lead times and compare it with single sourcing two cases are studied using the uniform and the exponential distributions which may be thought of as two extreme ways of representing stochastic lead times in our two vendor model the order quantity is split equally between the two vendors and the split orders are placed simultaneously when the inventory position reaches the reorder level a comparison of the total expected costs suggests that when the uncertainty in the lead times is high and the ordering costs are low dual sourcing could be cost effective

the effectiveness of alternative monetary policy tools in a zero lower bound environment this paper reviews alternative options for monetary policy when the shortterm interest rate is at the zero lower bound and develops new empirical estimates of the effects of the maturity structure of publicly held debt on the term structure of interest rates we use a model of risk averse arbitrageurs to develop measures of how the maturity structure of debt held by the public might affect the pricing of level slope and curvature term structure risk we find that these treasury factors historically were quite helpful for predicting both yields and excess returns over 1990 2007 the historical correlations are consistent with the claim that if in december 2006 the fed were to have sold off all its treasury holdings of less than 1 year maturity about 400 billion and use the proceeds to retire treasury debt from the long end this might have resulted in a 14 basis point drop in the 10 year rate and an 11 basis point increase in the 6 month rate we also develop a description of how the dynamic behavior of the term structure of interest rates changed after hitting the zero lower bound in 2009 our estimates imply that at the zero lower bound such a maturity swap would have the same effects as buying 400 billion in long term maturities outright with newly created reserves and could reduce the 10 year rate by 13 basis points without raising short term yields

analysis of a q r t inventory policy with deterministic and random yields when future supply is uncertain abstract this paper considers a stochastic inventory model where the quantity ordered sometimes may not be available due to strikes etc we represent the supplier s availability process as a two state continuous time markov chain where one state corresponds to availability and the other state corresponds to unavailability of the supplier the problem is to determine the reorder point the order quantity when the system is found in on state and how long to wait before the next order if system is in off state it is assumed that the state of the system is identified at a cost using the renewal reward theorem we construct the objective function as the long run average cost numerical sensitivity analysis results are provided we also analyze the problem when the yield i e amount received if available is random and discuss an example with beta distributed yield

optimal soft order revisions under demand and supply uncertainty and upstream information abstract demand patterns for products with short life cycles or seasonal demand do not follow a discernible pattern for individual sales events and seasons due to uncertainty associated with effectiveness of product promotions willingness of major retailers to carry product and their support competition and other unforeseen marketplace events factors these atypical demand patterns can be volatile and unsuitable for traditional demand forecasting in such cases buyers utilize market signals to regularly update demand forecasts under these settings sharing early soft order i e order forecast with the supplier reduces buyer s risk of supply shortages in this study we propose an optimal order revision policy for a buyer facing atypical demand and supply uncertainty for a single selling season based on a stochastic dynamic program we demonstrate the value of soft orders as well as supplier s inventory position information for the buyer we make several key contributions i we introduce a decision model for buyer to optimally revise soft orders under supply uncertainty with or without supplier s inventory position information under a deposit scheme ii we characterize the relationship between the optimal soft order and final firm order under demand forecasts and revisions demonstrating that optimal orders may be aggressive conservative or match the demand forecast iii we identify settings under which inventory position information of the supplier is beneficial to the buyer iv we offer a mechanism for identifying the minimum unit deposit cost that will lead to truthful soft orders from the buyer a detailed analysis explores the structure of the optimal ordering policies as well as the effect of cost parameters and sources of uncertainty on buyer performance

do countries free ride on mfn abstract the most favored nation mfn clause has long been suspected of creating a free rider problem in multilateral trade negotiations to address this issue we model multilateral negotiations as a mechanism design problem with voluntary participation we show that an optimal mechanism induces only the largest exporters to participate in negotiations over any product thus providing a rationalization for the principal supplier rule we also show that through this channel equilibrium tariffs vary according to the herfindahl hirschman index of export shares higher concentration in a sector reduces free riding and thus causes a lower tariff estimation of our model using sector level tariff data for the u s provides strong support for this relationship

tariff liberalisation and increased administrative protection is there a quid pro quo theoretical models and intuition suggest that the amount of non traditional protection such as anti dumping duties will increase as more traditional forms such as tariffs are lowered under multilateral trade agreements this paper is the first empirical study of the role of tariff liberalisation in the spread of anti dumping through both correlations and regression approaches we analyse the relationship between tariff concessions made during the uruguay round trade negotiations and the filing of anti dumping petitions with particular interest in whether multilateral trade reductions have spurred the recent growth in new users of anti dumping policies we find that at least for developing economies tariff reductions agreed to under the uruguay round not only increased the likelihood of a country using anti dumping protection but also the total number of anti dumping petitions filed by countries

the logic of private and collective action since mancur olson s logic of collective action 1965 it is impossible for political scientists to conceive of political participation without reference to his powerful argument linking numbers of participants public goods and participatory outcomes what is puzzling is the poor empirical support for this argument in the domain where it should work best namely explaining business political activity olson thought his arguments principally applicable to economic groups and for the empirical development of his arguments olson drew heavily on business interests the most active segment of the interest group community we explore these arguments with business political activities data by examining the statistical performance of various measures of market structure in determining business political activity and find little empirical support we do offer an alternative basis for business behavior lodged in both private and collective goods that preserves business rationality and also helps explain not only the amount of business political participation but the modes of business participation w hen we think about the paradox of participation one of the formative puzzles of modern political science we tend to think first of voting and citizen participation we think of the large numbers involved the small probability that an individual vote will be decisive and we conclude that no one will vote the puzzle then becomes why so many people do vote to find a solution we tend to plead some sort of diminished rationality such as the costs of voting are too low even to consider carefully or that they are outweighed by the norm of civic duty in this article we examine the paradox of participation in the principal context that olson 1965 considered it for the empirical development of his arguments olson drew heavily on business interests he observed that business was the most active segment of the interest group community and noted that for large numbers of participants seeking pubic goods the dominant choice is to do nothing he argued that business activity derived from multiple markets and related industries segmenting the larger business community into small groups in an oligopolistic market it is rational for the individual firm to participate in association with others or on its own a

do safeguard tariffs and antidumping duties open or close technology gaps abstract this paper examines how the country breadth of tariff protection can affect the technology adoption decisions of both domestic import competing and foreign exporting firms the contribution of the analysis is to show how firm level technology adoption changes under tariffs of different country breadth i show that a country specific tariff like an antidumping duty induces both domestic import competing firms and foreign exporting firms to adopt a new technology earlier than they would under free trade in contrast a broadly applied tariff like a safeguard can accelerate technology adoption by a domestic import competing firm but will slow down technology adoption by foreign exporting firms because safeguard tariffs can delay the foreign firm s adoption of new technology the worldwide welfare costs associated with using them may be larger than is generally believed

antidumping signaling and cheap talk abstract in the united states there is evidence that domestic non filing firms do not always support dumping countervailing duty investigations absent other factors domestic firms have an unambiguous incentive to support petitions filed by other domestic producers we argue that in cases where the non complainant firm is not a significant importer or exporter the most plausible explanation is that non support acts as a costly signal of private information extending the model to allow firms to engage in cheap talk such signaling can take place even in the absence of an investigation this result provides an explanation for the puzzling observation that fewer antidumping investigations are filed than one would expect

voluntary export restraints antidumping procedure and domestic politics a voluntary export restraint ver is preferred to a tariff by a government concerned about electoral returns when the influence of industry profits is large relative to the losses to consumers from higher prices if the foreign firm is uncertain of these pressures the antidumping code facilitates the complete transfer of the relevant information and generates a ver rather than a tariff in equilibrium the choice across instruments is determined by the political attributes domestic and foreign profits rise with the antidumping generated ver and the ver lowers the volume of trade by more than the expected duty copyright 1996 by american economic association