collusion collective action and protection theory and evidence this paper provides a novel explanation forthe formation of protectionist lobby groupsin imperfectly competitive sectors thelevel of collusion is shown to be a crucialdeterminant of the ability of firms tosustain lobbying we show that greatercollusion reduces firm contributionsto tariff lobbying when the governmentvalues welfare sufficiently and thecross price elasticity between the domesticand foreign goods is sufficiently high the empirical evidence from the u s supports the theory greater collusionreduces the level of pac contributions

political influence motives and the choice between tariffs and quotas abstract tariffs and quotas are not symmetric under a variety of circumstances this paper pursues the implications of one such circumstance domestic market power for the political choice of protectionist instrument in the context of a political support maximization model tariffs dominate quotas in the political model in the absence of revenue seeking motives in the presence of revenue seeking ambiguity arises but limits can be placed on the range of tariff or quota levels also some welfare implications emerge

optimal trade taxes for a large country with non atomistic firms abstract the conventional prescription for a country possessing market power in world markets is an import tariff or export tax typically a country will have a continuum of traders differentiated both by size and behavior optimal policy then involves a structure of trade taxes rather than a uniform tax or tariff with larger firms generally taxed at lower rates than smaller ones when policy is constrained to a uniform tax optimal policy depends both on the foreign demand or supply elasticity and the size distribution of firms the principles derived here are applied numerically to indonesia s exports of nutmeg

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 impact of subsidies on x efficiency in ldc industry theory and an empirical test the x inefficiency costs of protection and industrial concentration have been topics of considerable interest in the literature on economic development balassa 1975 and bergsman 1974 for example have argued that protection by increasing x inefficiency generates a major welfare cost which is not captured by traditional costs of protection calculations and white 1976 has examined the relationship between inappropriate factor intensities which he associates with xinefficiency and industrial concentration the common theme which emerges from each of these studies is that public policy can have a major impact on economic performance not only by influencing factor proportions but also by influencing the intensity with which a non measurable input x efficiency is employed despite the intuitive appeal of the x efficiency concept there have been very few empirical tests of this hypothesis this partly reflects the imprecise nature of the basic concept but also the lack of adequate micro economic data x efficiency clearly relates to efficiency within firms so that the most appropriate tests would rely on data on firm level efficiency in this paper we propose a direct test of the x efficiency hypothesis using firm level data we build on previous work by corden 1970 1974 and martin 1978 who showed how to model x efficiency effects using the concept of managerial leisure we extend these simple models of managerial behavior emphasizing the role of the external managerial labor market the model is then used to explore the relationship between changes in public policy managerial effort and x inefficiency certain predictions of the model are tested using cross section data from a survey of firms in two subsidized industries in ghana efficiency indices are computed on the basis of a translog frontier production function variations in relative efficiency are then correlated with several explanatory variables including the presence or absence of subsidy payments to the firm subsidized firms in both industries are found to exhibit higher relative levels of x inefficiency

stability of a uk money demand equation a bayesian approach to testing exogeneity the paper analyses an m3 demand for money equation for the united kingdom attention is paid to the policy change that occurred in 1971 with the introduction of the measure known as competition and credit control classical and bayesian single equation instrumental variables procedures are developed to investigate the exogeneity of the short term interest rate and the constancy of the parameters of the underlying relationships the parameters of the short term equation have changed as well as the exogeneity status of the interest rate variable but the parameters of the long term equation appear to be less affected by the policy change

a bargaining theory of inefficient redistribution policies when two policies are available to achieve the same goal why is the relatively inefficient one often observed we address this question in the context of policies used to redistribute income towards special interest groups sigs in a two stage model in the first stage the set of constraints on policy instruments is chosen in the second stage the government and sigs bargain over the level of the available transfer policies restrictions on the use of efficient policies and the use of inefficient ones reduce the surplus over which sigs and governments can bargain there is however an offsetting effect not generally recognized in models of inefficient redistribution an improvement in the government s bargaining position which allows it to capture a larger share of the surplus we show that this positive effect for the government dominates under plausible conditions inefficient policies are the equilibrium outcome under alternative first stage mechanisms for policy selection such as the election of policymakers or in some cases bargaining between sigs and the government jel classification d7 f13 c70 h23

endogenous trade policy through majority voting an empirical investigation abstract the median voter approach to trade policy determination within a heckscher ohlin framework as in mayer am econ rev 74 5 1984 970 predicts that an increase in inequality holding constant the economy s overall relative endowments raises trade barriers in capital abundant economies and lowers them in capital scarce economies we find support for this prediction using cross country data on inequality capital abundance and diverse measures of protection we perform certain robustness checks that include controlling for the effects of political rights and schooling as well as using alternative datasets on factor endowments

the dynamic effects of money combining short run and long run identifying restrictions using bayesian techniques this paper proposes a bayesian approach to incorporating specification and identification uncertainty into a var analysis of the dynamic effects of money supply shocks on the macroeconomy the approach follows poirier 1991 in averaging over discrete model specifications in forming posterior densities of the dynamic responses to such shocks two distinct means of identifying money supply shocks are considered here one that imposes contemporaneous restrictions and one that imposes long run monetary neutrality i estimate bounds on dynamic responses that account for specification and parameter uncertainty and find strong evidence of short run real effects of money on the economy including a liquidity effect for both long term and short term interest rates furthermore some results differ substantially across identifying restrictions if model uncertainty is ignored

money income prices and interest rates including data from the 1980s sharply weakens the postwar time series evidence indicating significant relationships between money however defined and nominal income or between money and either real income or prices separately focusing on data from 1970 onward destroys this evidence altogether evidence indicating cointegration of real income and real money balances with due allowance for the effect of interest rates also deteriorates when the sample extends through the 1980s a positive finding is that the spread between the commercial paper rate and the treasury bill rate consistently contains highly significant information about future movements in real income copyright 1992 by american economic association

olson s logic of collective action at fifty in the 50 years since its publication mancur olson s logic of collective action has had an enormous impact on the academic literature in both economics and political science in this review essay i discuss olson s work in light of the ensuing research particularly developments in the theoretical literature much of the discussion focuses on the group size paradox as applied to politics i e the extent to which the group size paradox can explain why the interests of some groups are better represented in the political process than others i also discuss selective incentives with an emphasis on the byproduct mechanism under which a firm sells a private good and uses the resulting profits to provide a public good

policy choice theory and evidence from commitment via international trade agreements abstract why do governments employ inefficient policies when more efficient ones are available for the same purpose we address this puzzle in the context of redistribution toward special interest groups sigs by focusing on a set of important policies tariffs and non tariff barriers ntbs in our policy choice model a government can gain by committing to constrain tariffs through international agreements even if this leads to the use of less efficient ntbs commitment has political value because it improves the bargaining position of a government that is weak relative to domestic sigs using detailed data we find support for several of the model s predictions including i tariff commitments in trade agreements increase the likelihood and restrictiveness of ntbs but not enough to offset the original tariff reductions ii tariff commitments are more likely to be adopted and more stringent when the government is weaker relative to a sig thus the results can explain the use of inefficient policies for redistribution and suggest that the bargaining motive is an important source of the political value of commitment in international agreements

lobbying counterlobbying and the structure of tariff protection in poor and rich countries a political economy model of protection is used to determine endogenously the intersectoral patterns of protection three propositions are derived that are consistent with the stylized patterns of tariff protection in rich and poor countries nominal protection rates escalate with the degree of processing protection is higher on average in poor countries and rich countries protect agriculture relatively more than they protect manufacturing whereas poor countries do the reverse numerical simulations for archetypal rich and poor economies confirm that the endogenously determined structure of protection is broadly consistent with observed patterns of protection

assessing the impact of unilateral trade policies eba and agoa on african beneficiaries exports using matching econometrics the existing literature studying the impact of non reciprocal preferential trade agreements nrptas assumes implicitly nrptas are non randomly assigned without showing the evidence of that using a matching methodology this paper investigates whether the african growth and opportunity act agoa and the everything but arms eba unilateral trade concessions have had an impact and in what magnitude on the exports of african beneficiary countries in the light of the evidence of the non random nature endogeneity of nrptas methodologically previous studies using the matching procedure focused on bi or multilateral trade agreements our work focuses on nrptas that depend only on donors conditions accordingly we show that for nrptas gravity covariates cannot be used for the matching procedure we propose to use political variables as determinants for obtaining non reciprocal trade preferences in order to address the endogenous nature of nrpta assignment our main results confirm that a country becomes eligible for a nrpta only when it meets certain conditions defined by their donors such as political stability and economic regulation for agoa and freedom of expression and human development for eba results also show that both agoa and eba policies have had a positive impact on african beneficiary countries exports to nrpta s providers even if the magnitude impact of eba is significantly lower than that of agoa

protection for sale in a developing country democracy vs dictatorship for a genuine small open economy that has experienced both dictatorship and democracy we find support for the predictions of the grossman helpman 1994 protection for sale model in contrast to previous studies we use various protection measures including tariffs the direct measure of the theoretical model and perform both single year and panel regressions using turkish industry level data the government s weight on welfare is estimated to be much larger than that on contributions more importantly we find that this weight is generally higher for the democratic regime than for dictatorship

incremental protection and efficient political choice between tariffs and quotas this paper offers a new political economy explanation for the increasing use in recent years of quotas instead of or in combination with tariffs as a form of trade protection we show that under domestic monopoly the comparative efficiency of tariffs and quotas in achieving political objectives will vary depending on the nature of the mark et and the level of protection at high levels of protection quotas can become more politically efficient than tariffs we also show that at low levels of protection a price equivalent quota may not exist

inference in cointegrating models uk m1 revisited the paper addresses the practical determination of cointegration rank this is difficult for many reasons deterministic terms play a crucial role in limiting distributions and systems may not be formulated to ensure similarity to nuisance parameters finite sample critical values may differ from asymptotic equivalents dummy variables alter critical values often greatly multiple cointegration vectors must be identified to allow inference the data may be 1 2 rather than 1 1 altering distributions and conditioning must be done with care these issues are illustrated by an empirical application of multivariate cointegration analysis to a small model of narrow money prices output and interest rates in the uk copyright 1998 by blackwell publishers ltd

antidumping decisions and macroeconomic variables in the usa this paper investigates the macroeconomic factors that explain antidumping decisions in the us international trade commission johansen s cointegration test results show that there is a long run equilibrium relationship between growth of the percentage of affirmative antidumping decisions and trade balance the error correction model shows that there is a causality running from the latter to the former growth of the percentage of affirmative antidumping decisions is revealed to cause slowdown in economic growth partisan characteristics are observed in the commissioners antidumping decisions

crop insurance in a political economy an alternative perspective on agricultural policy lawmakers often subsidize farmers in times of financial distress this article models this political impulse as a constraint on government farm policy describing how ex ante government farm insurance can deter ex post disaster relief and improve production incentives by countering the moral hazard that otherwise prevails absent ex ante government policy ex post relief takes the form of revenue insurance which prompts excessive entry into farm production and under production by operating farmers ex ante government policy can raise economic and political welfare by buying out low productivity farmers and offering profitable farmers a combination of revenue insurance price supports and a program participation fee copyright 2003 oxford university press

public good provision in a repeated game the role of small fixed costs of participation pecorino 1998 models tariff lobbying in a repeated game and finds that cooperation can be maintained in a large group even though tariff lobbying provides a rival public good to interest group members we add small fixed costs of participation to this model and find that cooperation must break down in large groups by contrast if a fully rival public good directly enters the utility function then cooperation is possible in large groups even with small participation costs thus we find only partial support for olson s 1965 proposition that collective action must break down in large groups

import protection business cycles and exchange rates evidence from the great recession this research estimates the impact of macroeconomic fluctuations on import protection policies over 1988 q1 2010 q4 for five industrialized economies the united states european union australia canada and south korea there is evidence of a strong countercyclical trade policy response in the pre great recession period of 1988 q1 2008 q3 during which increases in domestic unemployment rates real appreciations in bilateral exchange rates and declines in the gdp growth rates of bilateral trading partners led to substantial increases in new temporary trade barriers it then applies this pre great recession empirical model to realized macroeconomic data from 2008 q4 2010 q4 and find it predicts a surge of new import protection during the great recession e g for the us and eu the model predicts new trade barriers would cover an additional 15 percentage points of nonoil imports well above the baseline level of 2 3 percent of import coverage immediately preceding the crisis finally the research examines why the realized trade policy response differed from model predictions while exchange rate movements played an important role in limiting new import protection during the great recession there is also evidence of one particularly important change in trade policy responsiveness i e in this period governments refrained from imposing new temporary trade barriers against foreign trading partners experiencing their own weak or negative economic growth

are preliminary announcements of the money stock rational forecasts abstract we develop a theoretical framework of analyzing preliminary announcements of economic data and then apply this framework to the money stock we find that preliminary announcements of the money stock are best characterized as measured with classical errors in variables that is the revision is not correlated with the true value of the series the revision is however forecastable using information available at the time of the preliminary announcement our ability to forecast the revision implies that preliminary announcements are not rational estimates of the true money stock

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

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

lobbying and international cooperation in tariff setting abstract this paper develops a theory of tariff protection that incorporates cooperative behavior and lobbying governments use import tariffs or subsidies to maximize a weighted sum of lobbying contributions and general welfare governments do not use export taxes or subsidies and thus balance the interests of export and import competing lobbies in setting tariff levels in a symmetric model cooperation between governments is sustained by threats of punishment in future periods unless governments place too much weight on the future the result is a cooperative tariff otherwise the result is a reciprocal import subsidy

domestic politics foreign interests and international trade policy reply this paper incorporates the foreign interest in the determination of a country s international trade policy into a model of political competition between candidates contesting elective office we envisage foreign and domestic producer interests as expressing political support for a candidate via campaign contributions and candidates as making trade policy pronouncements to maximize political support from producer interests tariffs are divisive but vers are consistent with conciliatory policy positions yielding mutual gain to foreign and domestic interests no candidate has an interest in formulating a trade policy position using a tariff if a ver is a policy option protection in the developed countries has in recent years often taken the form of bilaterally negotiated voluntary export restraints vers rather than the more traditional unilaterally imposed import restrictions the use of voluntary export restraints has been paralleled by interest in the theoretical literature the effects of vers have been compared with tariffs and quotas and vers have been examined in a political economy framework with a view to identifying the gainers and losers from this form of restric

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

data revisions and the expenditure components of gdp the constant price components of the expenditure estimate of gdp for the united kingdom undergo an extensive process of revision as new information comes to light this study is concerned with three central themes the authors assess whether the preliminary vintages efficiently incorporate information available at the time of their compilation whether there is any evidence for the nonstationarity of data revisions and how to construct constant price time series when there are several changes of base copyright 1991 by royal economic society

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

monetary aggregates as monetary targets a statistical investigation in this paper the authors analyze statistical properties of the monetary base m1 and m2 for the postwar u s data record the authors are specifically interested in answering three policy related questions first to what extent do these monetary aggregates contain information useful for predicting movements in prices and real output second how do the aggregates rank as to their predictive usefulness third how do these aggregates rank as to the stability of their relationship to the macroeconomy copyright 1992 by ohio state university press

a critical assessment of the political preference function approach in agricultural economics abstract the policy preference function ppf approach has become popular with economists seeking to explain the origin of government policies in this paper a distinction between positive and normative work with the ppf concept is made positive work is shown to suffer from a variety of shortcomings including the misspecification of traditional ppfs and the failure to consider the importance of institutions constraints and the interaction between different commodity policies these weaknesses are reflected in the counter intuitive results of a simple ppf model designed to reflect the interaction between the ec s wheat and barley policies furthermore it is demonstrated that ppf weights change as a result of both political preferences and market parameters hence changes in ppf weights cannot be attributed to changes in preferences alone test of the axioms of revealed preference theory are used to demonstrate that even though ppf weights derived for the ec s wheat and barley markets have fluctuated considerably since the early 1970s we are not able to conclude that there has been a shift in political preferences the paper concludes with some comments about the use of ppfs in a normative framework the underlying assumption that policy makers optimise seems not surprisingly often to lead practitioners to the conclusion that observed policies are not so bad after all economists should also beware of the tendency to overlook possible differences between the ppf and the social welfare function

endogenous export subsidies as a revenue seeking activity some implications for the evolution of protection explaining the antiexport bias of trade policy requires a model in which there is some asymmetry between protection of the import competing and export sectors one asymmetry is that export subsidies require government expenditure while import tariffs raise revenue for the government a model is developed where lobbying for export subsidies is treated as a revenue seeking activity in contrast with the import competing sector it is found that there is no presumption that vicious circles exist in the export sector where a vicious circle refers to the tendency for exogenous political shocks to be amplified by an endogenous lobbying response

political reform and trade policy abstract the welfare effects of partial restrictions on political competition are investigated in a model in which two candidates receive campaign contributions from import competing industries in return for tariff protection ceilings on allowable contributions per industry may be welfare worsening particularly if the contributor elasticity is high because they induce candidates to seek additional contributors restrictions that reduce the number of industries allowed to contribute may also worsen welfare because candidates respond by increasing contributions and tariff protection for each active contributor the results suggest that the ability of candidates to circumvent partial restrictions may eliminate any potential benefits

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

unemployment and the labour management conspiracy we study a model in which management and a union bargain sequentially first choosing a rule that will later determine the level of employment and then choosing a wage the government then chooses an output or an employment subsidy an exogenous natural turnover rate in the unionized sector creates unemployment whenever the union wage exceeds the competitive wage government intervention can increase both the equilibrium amount of unemployment and worsen the intersectoral allocation of labour because of the induced change in the endogenous wage unemployment weakens but does not eliminate the possibility of a labour management conspiracy

tariffs subsidies and welfare with endogenous policy abstract it is a well established proposition of trade theory that in the absence of directly trade related distortions or policy goals subsidies are superior to tariffs for achieving any economic or non economic objective this paper shows that once the endogeneity of the distortion or non economic objective is allowed for the welfare ranking of various policies can be reversed the particular model analyzed is one where the level of non economic objectives that have to be fulfilled itself depends on the policy tools considered to fulfill them with this arises from the public good nature of tariffs compared to subsidies

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

subsidizing rent seeking antidumping protection and the byrd amendment abstract this paper argues that a recent u s law which distributes the tariff revenue resulting from successful antidumping petitions to firms that supported the petitions increases the amount of antidumping protection requested by u s firms in two ways first by increasing the total benefits accruing to industries filing successful petitions the law subsidizes rent seeking second by awarding these subsidies only to those firms that actively support the petition it mitigates the free rider problem traditionally associated with collective actions empirical results provide strong evidence that industries have filed more antidumping petitions under the new law moreover the average proportion of firms in the industry filing these petitions increased under the law suggesting that the law at least partially alleviates free riding incentives

the congressional bureaucratic system a principal agent perspective with applications to the sec this paper provides the theoretical perspective and empirical support for congressional dominance of agency decisions my thesis is twofold first because much of the previous evidence on this question is not evidence at all many scholars intuition and conclusions are based on a logically flawed foundation second i have provided here and in previous work a look at a variety of different agencies and in each case have shown how the events can plausibly be interpreted as involving congress agency problems within the congressional bureaucratic system are real and substantial just as they are within corporations however as in the latter institutional forms develop within the congressional system to partially if not wholly mitigate these problems the logical perspective together with the evidence provide a strong case against the agency dominance hypothesis as typified by the early sections of niskanen 1971 and wilson 1980

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

money and output viewed through a rolling window abstract we examine the extent to which fluctuations in the money stock anticipate or granger cause fluctuations in real output using a variety of rolling window and increasing window estimation techniques various models are considered using simple sum as well as divisia measures of m 1 and m 2 income prices and both the t bill rate and the commercial paper rate findings indicate that the relation between income money prices and interest rates is stable as long as sufficient data are used and that there is cointegration among the variables considered although cointegration spaces become very difficult to estimate precisely when smaller windows of data are used further both m 1 and m 2 are shown to be important predictors of income for the entire period from 1960 2 1996 3 based on modified versions of what we term the most damaging specifications from friedman and kuttner 1993 and thoma 1994 our new evidence is based in part on a rather novel model selection approach to examining the relationship between money and income 1998 elsevier science b v all rights reserved

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

evolving discretionary practices of u s antidumping activity using data on u s dumping margin calculations by the u s department of commerce usdoc we first document the rapid rise in u s dumping margins from around 15 in the early 1980s to over 60 by 2000 second statistical analysis finds that usdoc discretionary practices have played the major role in rising u s dumping margins over this period importantly the evolving effect of discretionary practices is due not only to increasing use of these practices over time but to apparent changes in implementation of these practices that mean a higher increase in the dumping margin whenever they are applied utilisant des donnees sur le calcul de l ecart entre les prix aux etats unis et les prix de ces biens dans leur marche national d origine dumping margin calcules par le u s department of commerce usdoc on montre que ces marges sont passees d environ 15 au debut des annees 80 a plus de 60 en l an 2000 une analyse statistique suggere que les pratiques discretionnaires du usdoc ont joue un role important dans l accroissement de ces marges au cours de la periode cela n est pas attribuable seulement a l accroissement de ces pratiques dans le temps mais aux changements apparents dans la mise en application de ces pratiques qui se sont traduits par un accroissement de la marge quand on choisit de l appliquer

risk averse rent seekers and the social cost of monopoly power there is now quite general recognition that the social cost of monopoly power encompasses the resources expended by individuals seeking to become the beneficiaries of monopoly rents however since the activity of rent seeking is generally not observable direct estimates of resources expended in quests to acquire monopoly power are usually impossible to come by 1 as a consequence the indirect approach of taking the observed value of monopoly rents as indicative of the unobserved value of the resources expended in rent seeking is quite generally adopted in approaches to evaluation of the social cost of such activity

a dynamic model of endogenous trade policy empirical evidence suggests that past levels of protection are significant determi nants of current levels of protection we investigate dynamic interactions among interest groups and resulting endogenous links between current and future trade policies we explore these intertemporal links in a small open economy in which lobbying and tariff policies are the outcome of a dynamic game among factor owners the model can generate cycles with prolonged periods of free trade and or prolonged periods of restricted trade i e persistent trade policies an interesting aspect of the environment is the role of lobbying as a partial

china s export growth and the china safeguard threats to the world trading system is there evidence from china s pre wto accession period that newly imposed u s or eu import restrictions deflect chinese exports to third markets the authors examine this question by drawing on a newly constructed data set of u s and eu product level import restrictions on chinese trade imposed between 1992 and 2001 and estimate their impact on chinese exports to 38 alternative markets there is no systematic evidence that the import restrictions imposed during this period resulted in chinese exports surging to such alternate destinations to the contrary there is weak evidence of a chilling effect on china s exports to third markets

real time prediction with u k monetary aggregates in the presence of model uncertainty a popular account for the demise of the u k s monetary targeting regime in the 1980s blames the fluctuating predictive relationships between broad money and inflation and real output growth yet ex post policy analysis based on heavily revised data suggests no fluctuations in the predictive content of money in this paper we investigate the predictive relationships for inflation and output growth using both real time and heavily revised data we consider a large set of recursively estimated vector autoregressive var and vector error correction models vecm these models differ in terms of lag length and the number of cointegrating relationships we use bayesian model averaging bma to demonstrate that real time monetary policymakers faced considerable model uncertainty the in sample predictive content of money fluctuated during the 1980s as a result of data revisions in the presence of model uncertainty this feature is only apparent with real time data as heavily revised data obscure these fluctua

forecasting substantial data revisions in the presence of model uncertainty a recent revision to the preliminary measurement of gdp e growth for 2003q2 caused considerable press attention provoked a public enquiry and prompted a number of reforms to uk statistical reporting procedures in this article we compute the probability of substantial revisions that are greater in absolute value than the controversial 2003 revision the predictive densities are derived from bayesian model averaging over a wide set of forecasting models including linear structural break and regime switching models with and without heteroscedasticity ignoring the nonlinearities and model uncertainty yields misleading predictives and obscures recent improvements in the quality of preliminary uk macroeconomic measurements

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

the political economy of international trade enduring puzzles and an agenda for inquiry a similar set of concepts has been central to the literatures on the formation of trade policy coalitions and the new economics of institutions the political and economic consequences of the degree to which assets are specific to a particular economic activity in this survey the authors take the necessary first step of summarizing the main findings of these two literatures and then suggest ways in which the issue might be joined in addition to providing a more coherent understanding of the findings of these two literatures and some new directions for them the authors show that many puzzles remain in the field of trade politics puzzles for which there are no appealing answers or where there are answers no strong evidence in support of them this essay then in addition to being a theoretical review of the literature puts forward an agenda for future study of international trade politics

endogenous lobby formation and endogenous protection a long run model of trade policy determination this paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions under certain conditions free trade turns out to be an equilibrium outcome either when the government has a high affinity for political contributions or when it cares a great deal about social welfare moreover greater inequality in asset distribution results in a greater number of lobbies and in most cases more protection for each of these lobbies furthermore industries with higher levels of capital stock fewer capitalists more inelastic demand and smaller geographical dispersion are the ones that get organized

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

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

is there a free rider problem in lobbying endogenous tariffs trigger strategies and the number of firms there are two reasons we expect moreconcentrated industries to have advantages over less concentrated industries in playing the lobbying game one is that in a noncooperative setting as the number firms rises we expect the free rider problem to become worse this is the finding of rodrik 1986 the second is that we expect that the ability to maintain a cooperative outcome deteriorates as the number of firms in the industry rises the classic reference is mancur olson 1965 also see russell hardin 1982 and todd sandler 1992 among others in contrast with the second intuition this paper shows that there is no general presumption that maintaining cooperation becomes more difficult as the number of firms in the industry rises the ability of an industry to overcome the free rider problem is analyzed in a re peated tariff lobbying game where cooperation may be maintained through the use of a simple trigger strategy 2 the difficulty of maintaining cooperation is measured by the critical value of the discount parameter all values above this critical value are consistent with cooperation and all values below the critical value imply that cheating will prevent maintenance of the cooperative outcome there is no presumption that this critical value rises with the number of firms a separate but related question involves asymptotic results standard intuition suggests that as industry structure approaches perfect competition it becomes impossible to maintain cooperation in the context of this paper this intuition corresponds to the critical value of the discount factor converging to i as the number of firms increases to infinity in the general case it is shown that the critical value of the discount parameter converges to a value less than 1 in the limit as the number of firms becomes arbitrarily large if the actual discount parameter lies above this value then cooperation may be maintained even with an infinite number of firms though the framework here is quite simple it provides results which contrast sharply to our standard intuition about how industry structure affects the ability to maintain cooperation there are two ways to interpret the results of this paper one is to assert that standard intuition is wrong and that there is in fact no presumption that maintaining cooperation becomes more difficult as the number

endogenous choice of trade policy instruments abstract recently developed theories of endogenous trade policy formation have attempted to explain tariffs as the result of economic interest seeking by individuals or groups this note demonstrates that tariffs will not emerge as a policy choice if income is redistributed solely through trade policy induced factor price changes a production tax cum subsidy will be adopted as both gainers and losers are better off than with a tariff

time inconsistency of protectionist programs protectionist trade policies have long been advocated as second best instruments to achieve certain national objectives in situations where there is a market imperfection in essence protection provides time and resources for firms to undertake cost reducing investments recently there has been an emergence of new arguments to justify the implementation of a national industrial policy to encourage investment and to ensure the competitiveness of targeted industries also at the theoretical level a new argument known as strategic trade policy has emerged according to this argument protectionism gives domestic firms strategic advantage against foreign firms to capture a greater share of export markets where rents are not competed away actually the performance of protectionist programs has been grim industries have not adapted and protection has had to be renewed again and again arguments justifying protection have avoided this issue by implicitly assuming that authorities can credibly precommit to eliminate protection this is a very strong assumption in fact government actions are not exogenous but they are rather the result of an optimization process or they are best responses to political pressures as stressed in the public choice literature 2 therefore if authorities capitulate to protectionist pressures in the present they are unlikely to resist them in the future in the event that the targeted firm would not have adapted the inability of authorities to precommit to the unconditional elimination of protection generates a trade off for the firm if during the program the firm does not invest sufficiently in cost

lobbying vs administered protection abstract import competing industries in many democracies can pursue import relief via administered protection ap procedures or can lobby politicians directly in this paper an industry chooses the option that maximizes expected profits both the ap and lobbying processes required a fixed resource cost and have an associated subjective probability of success we show that policy reforms that decrease the probability of success under administered protection or lobbying may reduce expected national welfare when both processes are potentially profitable

the rise of us anti dumping activity in historical perspective empirical studies of anti dumping activity focus almost exclusively on the period since 1980 this paper puts recent us anti dumping experience in historical context by studying the determinants of annual case filings over the past half century the conventional view that few anti dumping cases existed prior to 1980 is not correct although most did not result in the imposition of duties the increased number of cases in recent decades largely reflects petitions that target multiple source countries the number of imported products involved has actually fallen since the mid 1980s the annual number of anti dumping cases is influenced by the unemployment rate the exchange rate import penetration closely related to the decline in average tariffs and changes in the anti dumping law and its enforcement in the early 1980s

news and noise in g 7 gdp announcements revisions to gdp announcements are known to be quite large in all g 7 countries quarterly growth rate revisions are regularly more than a full percentage point at an annualized rate we examine the predictability of these revisions using standard statistical tests of whether the preliminary announcement is a rational forecast of the subsequently revised data previous work suggests that u s gdp revisions are largely unpredictable as would be the case if the revisions reflect news not available at the time that the preliminary number is produced we find that the degree of predictability varies throughout the g 7 although we find little predictability in u s revisions the data revisions for several foreign countries are highly predictable we also perform a simple real time forecasting exercise showing that for several countries the predictability of data revision could be used to generate improved preliminary data

comparative statics in general equilibrium models with a unionized sector this paper uses a simple theory of union behavior to examine the consequences of unionization for the basic comparative statics properties of the specific factors and heckscher ohlin trade models many of the standard results continue to emerge despite the union however in contrast to the competitive theory an increase in the price of the unionized commodity can unambiguously lower the real wages of union workers in the short run and in the long run can raise the real rewards of all factors employed in the union sector

anti dumping protection in a liberalising country mexico s anti dumping policy and practice the use of anti dumping policy has been steadily growing in recent decades and so has the theoretical and empirical literature on anti dumping however while developing countries as a whole have become at least as active as the traditional anti dumping regimes the usa the eu canada and australia the literature is almost exclusively concerned with the latter group this article gives an overview of anti dumping policy and practice in mexico one of the leading new anti dumping regimes it assesses how anti dumping has expanded since the country began liberalising trade in the mid 1980s and discusses how the policy has been applied in a protectionist way that is not dissimilar to policy practice in the traditional user countries

distortion triggered lobbying and welfare a contribution to the theory of directly unproductive profit seeking activities abstract the paper considers the normative implications of lobbying for non exclusive income generated by an exogenously specified policy intervention such lobbying activities are a subset of what bhagwati has termed directly unproductive profit seeking dup activities it is demonstrated that the welfare effects of lobbying triggered by a policy distortion depend critically on whether the direct impact of the policy constraint is on price or an quantity it is also shown that several standard comparative static welfare analyses of alternative policy distorted states are significantly affected once the policy intervention is assumed to be continuously accompanied by lobbying for the associated non exclusive income

endogenous trade policy and lobby formation an application to the free rider problem abstract this paper develops a model in which tariffs are determined through bargaining between a utility maximizing policy maker and an industry lobby individual firms only contribute to the lobbying effort if it is in their own self interest so that both trade policies and lobby formation are endogenous by introducing bargaining between the industry and the government the paper provides microfoundations for the tariff formation function approach taken by many authors in the political economy literature applied to the free rider problem the model identifies general conditions under which increasing the number of firms in an industry makes cooperation between them more difficult