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

economic determinants of free trade agreements abstract the purpose of this study is to provide the first systematic empirical analysis of the economic determinants of the formation of free trade agreements ftas and of the likelihood of ftas between pairs of countries using a qualitative choice model we develop this econometric model based upon a general equilibrium model of world trade with two factors of production two monopolistically competitive product markets and explicit intercontinental and intracontinental transportation costs among multiple countries on multiple continents the empirical model correctly predicts based solely upon economic characteristics 85 of the 286 ftas existing in 1996 among 1431 pairs of countries and 97 of the remaining 1145 pairs with no ftas

sps and tbt agreements and international agricultural trade retaliation or cooperation in this article we investigate whether the brazilian notifications to the tbt and sps agreements are characterized as retaliation or as cooperation in international agricultural trade in the period 1996 2008 a generalized method of moments gmm model is used to estimate game models of bilateral trade between brazil and its major partners united states european union and japan from the viewpoint of strategic games the results suggest that the brazilian notifications are forms of retaliation against the united states and regarding the european union the best result for brazil was conciliation on the other hand if the results are interpreted as equilibria of bargaining games they suggest that brazil has great bargaining power in trade with the united states and that cooperation characterized agricultural trade between brazil and the european union in the period analyzed in the case of agricultural trade between brazil and japan only japan has characteristics of a country with significant bargaining power

information and legislative bargaining the political economy of u s tariff suspensions this paper studies the political influence of individual firms on congressional decisions to suspend tariffs on u s imports of intermediate goods we develop a legislative bargaining model in which firms influence legislators by transmitting information about the value of protection using verbal messages and lobbying expenditures model estimation using firm level data on tariff suspension bills and lobbying expenditures reveals that the probability a suspension is granted decreases with each additional firm that expresses opposition this effect is significantly larger than that of either opponent or proponent lobbying due to the greater information content of verbal opposition and legislative bargaining costs jel f13 d7

trade policy of a free trade agreement in the presence of foreign lobbying abstract this paper studies the effect of foreign lobbies on trade policy of a country which is a member of a free trade agreement fta it uses a monopolistically competitive political economy model in which the government determines external tariffs endogenously the effect of foreign lobbying under the fta is examined empirically using canadian industry level trade data that allow differentiating of lobby groups by the country of origin the analysis suggests that the presence of foreign lobbying has a significant effect on the domestic trade policy the heterogeneity of foreign lobbies is also important the presence of an organized lobbying group in an fta partner country tends to raise trade barriers while an organized lobbying group of exporters from outside of the fta is associated with less protection

is protection for sale evidence on the grossman helpman theory of endogenous protection grossman and helpman 1994 present a theory of endogenous protection by explicitly modeling government industry interactions for which mere black box models previously existed they obtain a ramsey pricing type solution to the provision of protection which emphasizes the role of inverse import penetration ratios and import elasticities on the lobbying side the model makes predictions about lobbying competition and lobbying spending according to deadweight costs from protection the model not only makes for richer theory in terms of rigor and elegance but its predictions are directly testable whether the grossman helman model stands up to real world data is investigated in this paper predictions from both the protection side and lobbying side are tested using cross sectional u s nontariff barrier data we also compare the second generation grossman helpman model with a more traditional specification our results call for serious consideration of this model in the political economy literature

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

market access for sale abstract this paper focuses on the links between foreign lobbying and preferential market access granted by the united states government to exporters in the rest of the americas we first develop a simple framework based on grossman and helpman grossman g helpman e 1994 protection for sale american economic review 84 4 833 850 to explain how lobbying by foreign firms affects their preferential access to the united states market we then estimate the model using data on tariff preferences and lobby contributions for the 34 countries in the region empirical results suggest that foreign lobbying is an important force behind preferential market access to the united states the structural estimates indicate that the weight given to foreign lobby contributions in the united states government objective function is five times higher than the weight granted to tariff revenue forgone due to preferences thus our results indicate that market access is up for sale and foreign lobbies are buying it

academic earmarks and the returns to lobbying abstract in this paper we estimate the returns to lobbying by universities to motivate our empirical work we develop a simple theoretical model of university lobbying for academic earmarks our statistical analysis shows that universities represented by a house appropriations committee hac or senate appropriations committee sac member spend less money on lobbying than those that are not represented in addition using instrumental variables estimations we show that universities without hac or sac representation may receive some benefit to lobbying for earmarks although in many estimations this benefit is not statistically different from zero however for universities with hac or sac representation a 10 percent increase in lobbying yields an additional 2 8 percent or 3 5 percent increase in earmarks respectively this suggests that there are large returns to lobbying for academic earmarks if a university is represented by a member of one the hac or sac but little or no return if not

the political economy of opec abstract we develop a conceptual model that captures opec pricing behavior and apply it to explain the large gap observed between domestic fuel prices in opec countries and prices in the rest of the world we model opec as a cartel of nations not firms and assume that politicians use two instruments production quotas and domestic fuel consumption subsidies the cartel of nations model suggests that introduction of alternatives to petroleum products may lead opec to reduce exports and increase domestic fuel consumption the empirical analysis suggests that when opec sets production quotas it places similar weights on consumer and producer surplus but when opec countries set domestic fuel subsidies on average 6 more weight is given to consumer surplus with some of the opec countries pursuing very aggressive domestic cheap fuel policies

a comparative analysis of the informational efficiency of the fixed income market in seven european countries abstract this letter investigates the time varying behavior of long memory in sovereign and corporate bond indices of seven european union countries from july 1998 to november 2011 we compute the hurst exponent and detect that the current financial crisis affects more the informational efficiency of the corporate bond market than the sovereign bond market

what explains long memory in futures price volatility long memory in futures price volatility is a well documented stylized fact with implications for market efficiency risk management forecasting and option pricing bias the implications of long memory differ however based on whether it is of a fractional or of a stochastic type the aims of this article are to determine in the case of agricultural commodity futures data which type better describes price volatility and also to evaluate several competing explanations for findings of long memory the evidence presented here finds little support for three out of four potential explanations namely excessive noise in the volatility measure bias in the long memory estimator and understated ses of the long memory parameter for the data considered price volatility appears to be most likely generated by a nonfractional long memory process such as a stochastic break or stochastic unit root

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

environmentalism democracy and pollution control this paper makes two empirical contributions to the literature based on predictions generated by a lobby group model first we investigate how environmental lobby groups affect the determination of environmental policy in rich and developing countries second we explore the interaction between democratic participation and political electoral competition the empirical findings suggest that environmental lobby groups tend to positively affect the stringency of environmental policy moreover political competition tends to raise policy stringency in particular where citizens participation in the democratic process is widespread

a quantile based test of protection for sale model this paper proposes a new test of the protection for sale pfs model by grossman and helpman 1994 unlike existing methods in the literature our approach does not require any data on political organization we use quantile and quantile iv regressions to do so using the data from gawande and bandyopadhyay 2000 surprisingly the results do not provide any evidence favoring the pfs model we also explain why previous work may have inadvertently found support for it

political economy of the u s mexican tomato trade agreement we develop a political economy model to analyse the us mexican tomato trade agreement by treating the minimum import price as a negotiated settlement we incorporate the special characteristics of the us mexican tomato dispute namely trade among large countries the role of competing fresh and processed tomato lobbies quota revenues accruing to mexican producers bargaining for a minimum import price rather than a tariff and the role of the canadian tomato market we show the importance of the size of the lobby group s supply the weight elected officials place on national welfare and the elasticities of export supply and import demand in determining the optimal price wedge for the united states larger fresh tomato or cherry grape tomato supply intensifies the degree of protection awarded to us growers while us processors work to mitigate this effect from mexico s perspective larger mexican fresh or cherry grape output induces a push towards free trade due to the agreement s depressing effect on mexican prices while mexican processors and quota revenues exacerbate the price wedge

self enforcing trade agreements evidence from time varying trade policy the bagwell and staiger 1990 theory of cooperative trade agreements predicts new tariffs i increase with imports ii increase with the inverse of the sum of the import demand and export supply elasticities and iii decrease with the variance of imports the authors find us import policy during 1997 2006 to be consistent with this theory a one standard deviation increase in import growth the inverse of the sum of the import demand and export supply elasticity and the standard deviation of import growth changes the probability that the us imposes an antidumping tariff by 35 percent by 88 percent and by 76 percent respectively

the clash of liberalizations preferential versus multilateral trade liberalization in the european union there has been an explosion in the number of preferential trade agreements in the past decade preferential trade agreements are characterized by liberalization with respect to only a few partners and thus they can potentially clash with and retard multilateral trade liberalization despite this important concern with preferential trade agreements there is almost no systematic evidence on whether they actually affect multilateral trade liberalization the authors model the effect of preferential trade agreements on multilateral trade liberalization and show that preferential trade agreements slow down multilateral trade liberalization unless they have a common external tariff and allow for internal transfers next they use detailed data on product level tariffs negotiated by the european union in the past two multilateral trade rounds to structurally estimate their model the authors confirm the main prediction the european union s preferential trade agreements have clashed with its multilateral trade liberalization and find that the effect is quantitatively significant moreover they also confirm several auxiliary predictions of the model and provide new evidence on the political economy determinants of multilateral liberalization in the european union

protection for sale the case of oligopolistic competition and interdependent sectors in grossman helpman s 1994 canonical protection for sale pfs model political competition among industry lobbies is driven purely by their interests as consumers this paper introduces demand linkages and oligopolistic competition into the pfs framework to address the rivalry among lobbies stemming from product substitutability it shows that increased substitutability weakens the interest groups incentives to lobby and reduces tariff distortions this may explain why empirical tests of pfs find surprisingly little impact of lobbies on the government s trade policy decision the paper also analyzes endogenous lobby formation suggesting that demand linkages may adversely affect the industry decision to organize resume proteger les ventes le cas de la concurrence oligopolistique et des secteurs interdependants dans le modele canonique de grossman helpman 1994 protection for sale pfs la concurrence politique entre lobbyistes est purement alimentee par leurs interets en tant que consommateurs ce texte presente dans ce cadre d analyse les enchainements de la demande et la concurrence oligopolistique pour prendre en compte la rivalite entre lobbyistes qui derive de la substituabilite des produits on montre qu une substituabilite accrue reduit l incitation des groupes d interets a faire du lobbying et reduit les distorsions tarifaires cela peut expliquer pourquoi les tests empiriques du modele pfs ont decouvert un impact etonnamment faible des lobbies sur les decisions des gouvernements dans le monde des politiques commerciales le texte analyse aussi la formation endogene des lobbies suggerant que les enchainements de la demande peuvent affecter negativement la decision de s organiser

rain agriculture and tariffs this paper examines whether and how rainfall shocks affect tariff setting in the agricultural sector in a model of strategic trade policy the authors show that the impact of a negative rainfall shock on optimal import tariffs is generally ambiguous depending on the weight placed by the domestic policy maker on tariff revenue profits and the consumer surplus the more weight placed on domestic profits the more likely it is that the policy maker will respond to a rainfall shortage by reducing import tariffs these findings are robust to alternative assumptions about market structure and the timing of the game using detailed panel data on applied tariffs and rainfall for 70 nations the authors find robust evidence that rainfall shortages generally induce policy makers to set lower tariffs on agricultural imports

preferential versus multilateral trade liberalization and the role of political economy abstract in this paper we analyze the effect of the freedom to pursue preferential trade liberalization permitted by article xxiv of the gatt on country s incentives to participate in multilateral negotiations and on feasibility of global free trade we present a model in which countries choose whether to participate in preferential or multilateral trade agreements under political pressures from domestic special interest groups we show that heterogeneity in political preferences across countries plays an important role in determining the relative merits of preferential and multilateral approaches to trade liberalization on one hand the opportunity to liberalize preferentially may be necessary to induce countries with strong political motivations to participate in multilateral free trade negotiations on the other hand when countries share similar political preferences multilateral free trade that would have been politically supported otherwise becomes unattainable if countries can pursue preferential liberalization

auctions or grandfathering the political economy of tradable emission permits despite the prevalence of grandfathered permits we still observe that a hybrid policy in which a fraction of initial emission permits is distributed through auctions is adopted in some cases we also observe that some polluting industries support auctioned permits and that most environmental groups support grandfathered permits this paper attempts to explain these phenomena from the perspective of political economy and investigates the conditions under which grandfathering auctions or a hybrid instrument will be the equilibrium policy by constructing a two stage lobbying game in which the type of policy instrument auction grandfathering or a hybrid instrument is determined in the first stage and then the number of permits is decided in the second stage we highlight the strategic interaction of the lobbying activities between the two stages in explaining the behavior of the lobbying groups

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

trade barriers as bargaining outcomes whether bilateral trade barrier data conform with the grossman helpman 1995 model s predictions about trade talks is examined in this article a simple form of the prediction from the model is tested bilateral us japan and us eu data from the 1990s are employed the results are the first in the literature

evidence and explanation for the tariff lobbying paradox endogenous tariffs fall as protectionist lobbying rises recent empirical evidence suggests that u s protectionist lobbying expenditures rose while u s trade barrier fell we find that the same result holds in our panel data sample from 28 countries be

do south south trade agreements increase trade commodity level evidence from comesa south south trade agreements are proliferating yet the impact of these agreements is largely unknown as existing north north and north south micro level studies are likely to yield misleading predictions for south south trade agreements this paper estimates the impact of comesa on uganda s imports between 1994 and 2003 detailed import and tariff data at the 6 digit harmonized system level are used for more than 1 000 commodities based on a difference in difference estimation strategy the paper finds that in contrast to evidence from aggregate statistics comesa s preferential tariff liberalization has not considerably increased uganda s trade with member countries on average across sectors the effect however is heterogeneous across sectors finally the paper finds no evidence of trade diversion effects resultats au niveau des biens pour le comesa les accords commerciaux sud sud proliferent or l impact de ces accords reste largement inconnu car les micro etudes des accords nord nord et nord sud sont susceptibles de mener a des previsions trompeuses quand il s agit d accords sud sud ce texte evalue l impact de comesa sur les importations de l ouganda entre 1994 et 2003 on utilise des donnees detaillees sur les tarifs et les importations au niveau des codes a six chiffres pour plus de 1000 biens a l aide d un modele d ecart dans les differences on decouvre que contrairement a ce que suggerent les statistiques agregees la liberalisation des tarifs preferentiels de comesa n a pas accru considerablement le commerce avec les pays membres en moyenne dans tous les secteurs l effet est different selon les secteurs de plus il appert qu il n y a pas eu diversion du commerce

protection for sale an empirical investigation comment do contributions levels matter for endogenous protection or is the existence of a lobby sufficient are lobbies net benefits from protection identical to their contribution levels or does the level of protection simply reflect contribution levels of supporters and opponents we estimate the influence driven grossman and helpman 1994 and the tariff function findlay and wellisz 1982 models within a unified theoretical framework to examine the contrasting implications derived from these two prominent tariff formation models we find strong evidence that protection is indeed for sale the important new result is however that not only the existence of lobbies matters but also the relative size of the sectoral pro and anti protection contributions using j tests to compare the power of the models directly we cannot reject the null of correct specification of the influence driven model and find evidence of some misspecification in the tariff function model

lobbying competition over trade policy competition between opposing lobbies is an important factor in the endogenous determination of trade policy this article investigates the consequences of lobbying competition between upstream and downstream producers the theoretical structure underlying the empirical analysis is the well known grossman helpman model of trade policy determination modified to account for the cross sectoral use of inputs itself a quantitatively significant phenomenon with around 50 of manufacturing output being used by other sectors rather than in final consumption our empirical results validate the theoretical predictions importantly accounting for lobbying competition also alters substantially estimates of the welfare mindedness of governments in setting trade policy

are global trade negotiations behind a fragmented world of gated globalization abstract we show that global trade negotiations can prevent global free trade in a simple model where global tariff negotiations precede sequential free trade agreements ftas we show fta formation can expand all the way to global free trade in the absence of global tariff negotiations but global free trade never emerges when global tariff negotiations precede fta formation this result arises precisely because global tariff negotiations successfully elicit concessions from negotiating countries moreover global tariff negotiations can produce a fragmented world of gated globalization where some countries form ftas that eliminate tariff barriers among themselves while outsiders continue facing higher tariffs

the relationship between firm growth size and age estimates for 100 manufacturing industries this study uses a sample of all firms operating in 100 manufacturing industries to examine some aspects of firm dynamics it finds that firm growth the variability of firm growth and the probability that a firm will fail decrease with firm age it also finds that firm growth decreases at a diminishing rate with firm size even after controlling for the exit of slow growing firms from the sample gibrat s law therefore fails although the severity of the failure decreases with firm size copyright 1987 by blackwell publishing ltd

policy influence and private returns from lobbying in the energy sector in this article i quantify the extent to which lobbying expenditures by firms affect policy enactment to achieve this end i construct a novel dataset containing all federal energy legislation and lobbying activities by the energy sector during the 110th congress i then develop and estimate a game theoretic model where heterogeneous players choose lobbying expenditures to affect the probability that a policy is enacted i find that the effect of lobbying expenditures on a policy s equilibrium enactment probability to be statistically significant but very small nonetheless the average returns from lobbying expenditures are estimated to be over 130

the wto impact on international trade disputes an event history analysis abstract many consider improved dispute settlement one of the leading achievements of the wto this paper tests the implication of a game theoretic approach that predicts that more efficient litigation devices increase the frequency and number of trade disputes we propose an empirical event history analysis of gatt wto and ustr section 301 cases identify the demographic patterns for births and lifespans of u s disputes and test the hypothesis of a wto structural break the evidence supports the view that the wto increased the incidence of u s trade disputes while shortening their lifespan

union membership in the united states 1973 1981 this paper reports estimates of union membership gathered from may current population surveys from 1973 to 1981 the authors present data by occupation industry selected states and smsas race gender and educational attainment the paper both extends and differs from that by freeman and medoff which presents unionism estimates for the private sector for 1968 75 to facilitate longitudinal analysis this paper reports three year moving averages of occupational and industry data and annual estimates of demographic classifications the data include public sector as well as private sector workers and they exclude workers not covered by the national labor relations act also the authors provide only union membership estimates not estimates on workers covered by union contracts this paper suggests that the percentage of all workers that are unionized in the united states remained fairly constant over the 1973 81 period

do interest groups affect us immigration policy while anecdotal evidence suggests that interest groups play a key role in shaping immigration policy there is no systematic empirical analysis of this issue in this paper we construct an industry level dataset for the united states by combining information on the number of temporary work visas with data on lobbying activity associated with immigration we find robust evidence that both pro and anti immigration interest groups play a statistically significant and economically relevant role in shaping migration policy across sectors barriers to migration are lower in sectors in which business interest groups incur larger lobbying expenditures and higher in sectors where labor unions are more important

are there long cycles in common stock returns an enormous amount of empirical work has been directed toward understanding the nature of stock price movements early studies such as those by alexander 2 3 fama 10 and fama and blume 11 support the contention that stock price changes follow a random walk thus cycles that appear to exist are simply a statistical artifact more recent efforts namely young 28 greene and fielitz 12 praetz 24 and renshaw 25 however provide some evidence against this hypothesis and suggest that stock price changes follow some type of a cyclic time path explanations for these contradictory findings rely on the way that information is disseminated to processed by and acted on by market participants to date three basic information based scenarios have appeared in the literature 1 not all information is of equal importance 2 not all participants have the same information and 3 not all participants are equal in their ability to process information this latter scenario is the most recent and has been used by heiner 13 to develop a theory of predictable behavior by constructing a competence difficulty c d gap construct kaen and rosenman 16 extend heiner s 13 work to provide an explanation for the presence of nonperiodic cycles in asset prices especially the prices and returns of common stock they maintain that according to heiner s theory market participants differ in their ability in making the correct buy and sell decisions under uncertainty in financial markets the spread between the participants competence in conjunction with the complexity of the information i e the c d gap results in price changes in the same direction if new contradictory information is of substantial import directional change occurs since the arrival of new information is posited to a random event the resulting periods of similar price change behavior appear to be nonperiodic cycles empirically kaen and rosenman 16 support their contention by citing several studies that have used rescaled

anti foreign bias in the court welfare explanation and evidence from canadian intellectual property litigations abstract are judges concerned in the same way as policy makers with the effects of their decisions on national welfare in this paper we analyze this question by examining the outcomes of intellectual property rights ipr litigations between domestic and foreign firms we use a simple model of oligopoly in which ipr takes the form of a more efficient production technology to illustrate how antiforeign bias varies across cases when judges have welfare concerns the predictions of the model are tested using data on all canadian ipr cases over a four year period we find that foreign firms have about 25 percentage points lower probability of protecting their ipr in canadian courts relative to domestic firms we also find that courts decisions are aligned with national welfare maximization principles so that foreign firms are less likely to win in those cases when the implied welfare gains from not protecting foreign ipr are greater these findings are robust to controlling for endogenous selection of firms into litigation

the inefficiency of bitcoin revisited a dynamic approach abstract this letter revisits the informational efficiency of the bitcoin market in particular we analyze the time varying behavior of long memory of returns on bitcoin and volatility 2011 until 2017 using the hurst exponent our results are twofold first r s method is prone to detect long memory whereas dfa method can discriminate more precisely variations in informational efficiency across time second daily returns exhibit persistent behavior in the first half of the period under study whereas its behavior is more informational efficient since 2014 finally price volatility measured as the logarithmic difference between intraday high and low prices exhibits long memory during all the period this reflects a different underlying dynamic process generating the prices and volatility

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

fractional integration in agricultural futures price volatilities this article tests whether the volatility of agricultural futures prices exhibits fractional integration volatility series were constructed for fourteen agricultural futures price series with over 5 300 observations per series the volatility series exhibit strong long term dependence which is an indicator of fractional integration a fractional integration model figarch 1 d 1 performs significantly better than a traditional volatility model garch 1 1 in modeling agricultural futures price volatility

reconsidering the empirical evidence on the grossman helpman model of endogenous protection the emergence of the grossman and helpman 1994 model of endogenous protection as the preeminent model in the political economy of trade literature has been significantly advanced by the finding that its predictions about the cross industry pattern of protection are broadly consistent with the data however in their empirical implementation of the grossman helpman model researchers have assumed the presence of multiple policy instruments and extraneous political factors we argue that incorporating these assumptions into the theory significantly changes its predictions about the cross industry pattern of protection jel classification f1 l emergence du modele de protection endogene de grossman helpman en tant que modele le plus important dans la litterature sur l economie politique du commerce international a ete confirmee de maniere significative quand on a decouvert que ses predictions quant au pattern de protection a travers les industries se trouvaient generalement confirmees par les donnees cependant dans leur verification empirique du modele de grossman helpman les chercheurs ont postule la presence de multiples instruments de politique publique et de certains facteurs politiques on suggere que l ajout de ces postulats change de maniere significative les predictions du modele quant au pattern de protection dans les divers secteurs

the role of importers and exporters in the determination of the u s tariff preferences granted to latin america abstract this paper investigates the role played by domestic importers and foreign exporters in improving preferential access to the domestic market to this end the framework used in this paper extends the protection for sale analysis to explicitly model the role of domestic importers and foreign exporters in the determination of preferential trade treatment the predictions of the model are tested using data on preferential trade between the united states and latin american countries the results suggest that latin american exporters and us importers lobbying efforts have a significant and important role in determining the extent of preferential access granted by the united states more interestingly these findings also show that u s importers capture a very substantial share of the rents generated by tariff preferences these results therefore shed a pessimistic view on preferential trade schemes as a reliable source of gains for developing countries

gross job flows and the evolution of size in u k establishments this paper analyzes a relationship between establishment size and gross job creation and destruction in the u k during the 1980 s i find that the gross job creation rate is highest in small plants and lowest in large ones in contrast the gross job destruction rate is lowest in small plants and highest in large ones in absolute numbers however large plants create but also destroy most jobs i test convergence in plant size by computing markov transition matrices the advantage of this approach is that it avoids galton s fallacy of regression towards the mean and that it reflects job creation and destruction between size classes i find no evidence of convergence hence no regression towards the mean

interest group politics in a federation the optimal degree of decentralization depends on the importance of inter state externalities of local policies we show that inter state externalities are determined by the spatial distribution of interest groups within the country interest groups who have multi state scope internalize inter state externalities to a larger extent than the lobbyists with interests within a single state we use variation in the geographic boundaries of politically powerful industrial interests to estimate the effect of inter state externalities on firm performance using firm level panel data from a peripheralized federation russia in 1996 2003 we show that controlling for firm fixed effects the performance of firms substantially improves with an increase in the number of neighboring regions under influence of multi regional business groups compared to the number influenced by local business groups our findings have implications for the literatures on federalism and on international trade as trade restrictions are a common source of inter state externalities

us non tariff barriers as privately provided public goods abstract the endogenous theory of protection is empirically investigated in a different light rather than emphasizing the determinants of the supply of protection the present study emperically investigates the micro level demand side behavior of firms predictions from bergstrom et al journal of public economics 1986 2 25 49 about the private provision of public goods provide a theoretical foundation for such a demand side econometric investigation if rational lobbies are observed to behave in a manner consistent with the theory of the private provision of public goods then it must be the case that they are able to influence trade policy the econometric specification is also consistent with the special interest models of olson the logic of collective action public goods and the theory of groups harvard university press 1965 stigler bell journal of economics and management science 1971 2 137 146 baron quarterly journal of economics 1989 1 45 72 and grossman and helpman american economic review 1994 84 833 850 hence evidence presented in this study from the demand side behavior of firms has the deeper implication that it validates the theory of endogenous protection an issue that is still controversial among trade theorists

a search for long memory in international stock market returns abstract a major issue in financial economics is the behavior of stock returns over long as opposed to short horizons this study provides empirical evidence from the perspective of long memory analysis international evidence on long memory is explored using the morgan stanley capital international stock index data for eighteen countries two tests that are robust to short term dependence and conditional heteroskedasticity are employed a modified rescaled range test and a fractional differencing test the empirical results in general provide little support for long memory in international stock returns the findings are not sensitive to inflation adjustments in stock returns data sources and statistical methods used

firm growth and ownership in transition countries this paper uses data from firm level surveys to investigate firm performance for state owned privatized and de novo private firms in romania bulgaria and hungary after controlling for life cycle size and product market effects i find that de novo private firms outperform privatized and state owned ones c 1997 elsevier science s a

can poor countries lobby for more us bilateral aid summary this article explores if countries can lobby the us government for the allocation of us bilateral foreign aid we consider an informational lobby model where lobbying has two effects first a direct effect by informing us policymakers about their countries needs second an indirect effect on policymakers by informing them about common interests in economic or geopolitical terms the lobbyist thus influences the decisions about the allocation of aid resources we estimate the effect of the recipient country s lobbying agents in obtaining foreign aid the econometric results show that lobbying positively affects the amount of bilateral aid received

a swing state theory of trade protection in the electoral college this paper analyzes trade policy determination in the electoral college in the presence of swing voters it determines the circumstances under which incumbent politicians have an incentive to build a reputation for protectionism thus swaying voting decisions and improving their re election probability strategic trade protection is shown to be more likely when protectionist swing voters have a lead over free trade supporters in states with relatively strong electoral competition and in states representing a larger proportion of electoral college votes an empirical test using a measure of industrial concentration in swing and decisive u s states lends support to the theoretical findings

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

economic reform voting and local political intervention evidence from india abstract this paper uses the indian tariff reforms of the early nineties to estimate how voters hurt by economic reforms respond regions more hurt by the tariff reform increased their support for both the party that initiated their suffering and parties with similar preferences in favor of poverty centric policies this response is surprisingly sophisticated where voters did not simply punish incumbents for negative income shocks and correctly discounted initial anti reform stances by opposition parties that later turned out to be false furthermore the strength of this voting response varied with both geography and local political incentives suggesting that the economic effects of reforms might vary substantially in large and decentralized democracies

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

protection for sale with imperfect rent capturing we extend the protection for sale framework to non tari barriers introducing partial rent capturing leads to a testable specification that bridges the gap between the grossman and helpman 1994 model and its empirical implementation where coverage ratios have been used to measure protection the econometric analysis supports our augmented specification and leads to more realistic estimates for the structural parameters of the model jel classification f13

substitutability and protectionism latin america s trade policy and imports from china and india this article examines the trade policy response of latin american governments to the rapid growth of chinese and indian exports in world markets to explain more protection in sectors where a large share of imports originates in china and india the protection for sale model is extended to allow for region specific degrees of substitutability between domestic and imported varieties of a good the results suggest that more protection toward chinese and indian goods can be explained by the higher substitutability of chinese and indian goods with domestic varieties the data support the model which performs better than the original protection for sale framework in explaining latin america s structure of protection

complex bubble persistence in closed end country funds abstract we seek to resolve the misspecified fundamental problem in speculative bubbles through examining the behavior of closed end country funds which possess well defined fundamentals based on their net asset values we study six funds during an episode when large premia emerged and subsequently disappeared we apply rescaled range and regime switching tests which reject the no bubble null hypothesis for these premia these results are placed in a complex bubble model framework interpretable according to the big player model

regulatory capture a review this article reviews both the theoretical and empirical literatures on regulatory capture the scope is broad but utility regulation is emphasized i begin by describing the stigler peltzman approach to the economics of regulation i then open the black box of influence and regulatory discretion using a three tier hierarchical agency model under asymmetric information in the spirit of laffont and tirole 1993 i discuss alternative modelling approaches with a view to a richer set of positive predictions including models of common agency revolving doors informational lobbying coercive pressure and influence over committees i discuss empirical work involving capture and regulatory outcomes i also review evidence on the revolving door phenomenon and on the impact that different methods for selecting regulators appear to have on regulatory outcomes the last section contains open questions for future research copyright 2006 oxford university press

protection for sale or surge protection this paper asks whether the results obtained from using the standard approach to testing the influential grossman and helpman protection for sale pfs model of political economy might arise from a simpler setting a model of imports and quotas with protection occuring in response to import surges but only for organized industries is simulated and shown to provide parameter estimates consistent with the protection for sale framework this suggests that the standard approach may be less of a test than previously thought

the political economy of non tariff measures over the last decades non tari measures ntms have seen an important upsurge how ever little research has focused on the political economy of non tariff protection and the existing studies are mainly based on a single country or a specific type of measures this paper seeks to fill the gap by empirically evaluating the determinants of ntms in several countries both developed and developing overall results show certain protectionist purposes behind the adoption of ntms this conclusion is reinforced for restrictive measures i e subject to trade concerns but does not hold for non restrictive measures suggesting the legitimate goal of several ntms furthermore transnational lobbying defined as the influence exerted by national business groups during the ministerial conferences the highest authority of the world trade organization wto increases the probability of adopting ntms in both developed and developing countries

measuring the brazilian ethanol and gasoline market efficiency using dfa hurst and fractal dimension abstract the ethanol and petroleum represent important energy commodities brazil is one of the world s largest producers of ethanol and became one of the ten largest global oil explorers in 2018 this paper proposes the detrended fluctuation analysis dfa hurst exponent h and fractal dimension d to investigate the dynamic behavior of ethanol and gasoline prices series in brazil furthermore a new market efficiency measure namely the efficiency index ei is also proposed some on going change toward a more efficient market in the follow up of an institutional political change is analyzed the data series are obtained from the national agency of petroleum and the natural gas and biofuels anp weekly spot prices are used for time windows covering two periods the first period p 1 precedes the brazilian presidential impeachment occurred in 2016 and includes data from january 2011 to december 2015 the second p 2 addresses the period from july 2016 to july 2018 covering the post impeachment scenario with new government policies in the energy sector the results indicate a subtle path toward market efficiency for the ethanol and a clear moving toward better efficiency for the gasoline market after changes in the fuel policy of brazil moreover the h and d indices prove to be useful tools for tackling the price dynamics of the fuel market and to build the new measure ei

can we obtain realistic parameter estimates for the protection for sale model in the grossman and helpman 1994 model of endogenous trade protection sectoral lobbies try to influence an incumbent government that maximizes a weighted sum of political contributions and aggregate welfare we empirically investigate this model using u s and turkish data our specification is more tightly tied to theory than those in existing studies additionally we assume all specific factor owners to be organized into different lobbies these changes validated by hypothesis tests yield more realistic parameter estimates of the government s concern for aggregate welfare and of the fraction of population organized into lobbies peut on obtenir des calibrations realistes des parametres du modele de protection en vue d augmenter les ventes dans le modele de protection commerciale endogene de grossman helpman 1994 des lobbys sectoriels tentent d influencer un gouvernement en place qui maximise une somme ponderee des contributions politiques et du bien etre collectif les auteurs utilisent ce modele pour analyser les donnees pour les etats unis et la turquie on specifie le modele d une maniere qui serre de plus pres la theorie que ce qui a ete le cas dans les etudes anterieures de plus on assume que tous les proprietaires de facteurs de production specifiques sont organises en lobbys differents ces changements valides par des tests d hypotheses engendrent des estimations plus realistes des parametres de la fonction d interet du gouvernement pour le bien etre collectif et pour la fraction de la population organisee en lobbys

lobbying under political uncertainty abstract this paper considers a model of lobbying described as a common agency game it departs from the current literature by assuming that the special interest groups are not a priori organized or unorganized and that the type of the politician is not common knowledge we characterize equilibria when the choice set of the politician consists of two policies we discuss the conditions leading to efficiency and the characteristics of the groups explaining their relative success in the process of influence we also offer some results for the general case including disjoint necessary and sufficient conditions for the equilibria to be efficient

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

long term dependence in stock returns abstract we test for long term dependence in us stock returns analyzing composite and sectoral stock indices and firms returns series to evaluate aggregation effects fractal dynamics are not detected in stock indices but are present in some firms returns series

why special economic zones using trade policy to discriminate across importers tariffs are generally assumed to depend on the product not the identity of the importer however special economic zones are a common economically important policy used worldwide to lower tariffs on selected goods for selected manufacturers i show this is motivated by policymakers desire to discriminate across buyers when a tax is intended to raise prices for sellers through a mechanism distinct from existing theories of optimal taxation using a new dataset compiled from public records and exogenous changes in imports of intermediate goods i find the form composition and size of us zones are consistent with the theory

trade policy reform endogenous lobby group formation and environmental policy abstract this paper explores the effects of trade liberalization on environmental policy outcomes when collective action is endogenous the polluting industry s ability to undertake lobbying is shown to depend on the degree of competition in the product market establishing a new link between trade and environmental policies if trade liberalization causes industry collective action to become harder to sustain the stringency of the environmental policy is likely to rise these results highlight the role of trade liberalization on product market competition and its consequent impact on the incentive to lobby for less stringent environmental policies

worker turnover and job reallocation in taiwanese manufacturing the paper examines time series patterns of job and worker flows in a newly industrializing economy nie using plant level data from the taiwan manufacturing sector the cyclical behaviour of job reallocation and its relation with worker turnover is analysed it is found that job reallocation and labour turnover are procyclical at both the aggregate and two digit industry levels the share of worker turnover caused by gross job reallocation is 17 suggesting the majority of observed worker turnover reflects rotations of positions that are neither created or destroyed there is substantial heterogeneity in plant specific job and worker turnover patterns job creation and job destruction rates are higher among small plants and private sector plants the private plants are more dynamic than public plants in terms of worker turnover controlling for year and industry effects it is found that job creation and worker turnover are both higher in export oriented industries

the political economy of the us mortgage default crisis we examine the effects of constituents special interests and ideology on congressional voting on two of the most significant pieces of legislation in us economic history representatives whose constituents experience a sharp increase in mortgage defaults are more likely to support the foreclosure prevention act especially in competitive districts interestingly representatives are more sensitive to defaults of their own party constituents special interests in the form ofhigher campaign contributions from the financial industry increase the likelihood of supporting the emergency economic stabilization act however ideologically conservative representatives are less responsive to both constituent and special interests jel d72 g21 g28

long term and short term price memory in the stock market abstract in this study we examine the issue of memory in common stock returns through an analysis of short and long term dependencies in various equity return series we conclude that there is no compelling evidence that would support a finding of systematic dependencies in the behavior of equity returns

trade adjustment political pressure and trade protection patterns i introduction even the most passionate supporters of free trade would admit that trade liberalization is frequently accompanied by considerable costs in terms of unemployment and relocation of workers who have lost their jobs due to intensified import competition laid off workers must be compensated during their job search and often they must be retrained in order to acquire the skills needed to enter a new industry while economists generally agree that the gains from trade eventually outweigh the costs of adjustment we also recognize that recovery may take years years that an incumbent politician who faces re election and has to bear the direct costs and indirect consequences of adjustment does not have in this article i extend the seminal work of grossman and helpman 1994 g h hereafter to show that even though they are not large budgetary expenses trade adjustment considerations are important determinants of trade policy the most interesting and important finding is that trade induced unemployment and trade adjustment costs can generate positive levels of trade protection for unorganized industries even in the presence of political pressure from the organized sectors this prominent feature of the data cannot be explained by the g h model and therefore cannot be captured by empirical studies that apply the g h framework in its original version to perform the empirical analysis i use novel u s data sets that directly identify trade induced unemployment and enable measurement of trade related retraining costs the latter allow me to introduce adjustment costs into the extensive empirical literature on endogenous trade protection which to the best of my knowledge has yet to quantify the importance of adjustment considerations as motives for protection the highly visible political fallout related to trade induced unemployment and trade adjustment costs make them very appealing arguments for proponents of trade protection especially in a political economy setting where the public official cares about re election vocal media coverage of plant closings lost jobs and growing income inequality all blamed on trade and stories of the hardships faced by workers who have lost their jobs because of increased imports are issues dear to the heart of a patriotic voter 1 given the populist view that trade destroys domestic jobs and the altruistic nature of voters who are willing to pay higher prices for imported goods in order to save domestic jobs it is not hard to see how the political costs from lost jobs could be substantially larger than the actual expenditures needed to help the displaced workers in other words the political benefits from helping trade affected workers and saving domestic jobs may outweigh the monetary costs of doing so within the context of a political agenda aimed at garnering votes accordingly i find that the government in office is highly sensitive to the presence of trade induced unemployment and trade adjustment costs despite their small monetary value furthermore i argue that a static setting where the same analysis could be repeatedly applied for each election cycle within a dynamic model is very appropriate to capture the political motives that i describe here following grossman and helpman 1994 i derive the optimal level of sectoral trade protection as a locally truthful sub game nash equilibrium in a static model where in addition to responding to political pressure from organized industries the incumbent official is sensitive to the presence of trade induced unemployment and trade adjustment costs the story behind the model is straightforward due to wage rigidity a fall in world prices results in unemployment and consequently in redistribution of skilled workers under the existing unemployment insurance ui and trade adjustment assistance 2 taa programs the government must pay unemployment benefits and must cover the costs of relocation and retraining of workers who have lost their jobs due to increased imports

china trade policy review a political economy approach chinese trade policy has experienced great reversal in the year of 2008 a series of constraining measures taken previously have been loosened eventually we investigate this situation using a political economy approach unlike in democratic countries where interest groups play a crucial role in trade policy change in china given the political reality leaders will and trade partners pressure are the determinant factors we call this top down and outside in trade policy actually the idea of harmonious society and scientific development emphasised by top leaders in october 2006 paved the road for the following trade policy adjustment i e reducing tax rebate limiting processing trade compressing the catalogue for foreign investment etc however with the shock of a global financial tsunami these measures get coastal areas relying on foreign trade heavily into trouble the economic downturn in pearl river delta even astonished the decision making body calling on a quick reversal in foreign trade policy if interest groups had been allowed to express their demand formally and adequately from the very start the cycle of taking up first but giving up last in policy design would have not taken place in other words the bottom up and inside out trade policy should be more stable although flexibility is necessary in the face of uncertainty frequent and discretionary trade policy change usually produces effects of pro government not pro market this is unfavourable for the transformation in china the constraining trade policy in mid 2007 to mid 2008 has been a part of the government s desire to seek healthier development however with the inside and outside surroundings getting worse the structural adjustment long run objective has had to concede to the economic growth short run objective

the effects of 401 k participation on the wealth distribution an instrumental quantile regression analysis we use instrumental quantile regression approach to examine the effects of 401 k plans on wealth using data from the survey of income and program participation using 401 k eligibility as an inst

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

protectionism versus risk in screening for invasive species abstract i examine the extent to which enforcement of a biosecurity import restriction us border inspections for foreign pests and diseases is used as a protectionist trade barrier the parameters of a structural model of border inspection are estimated using a detailed dataset documenting the outcome of us agricultural border inspections i find that inspections are conducted in a manner that places an implied welfare weight on domestic producers relative to consumers ranging from 1 to 1 63 i also find evidence that the inspection agency takes terms of trade into account when inspecting agricultural imports these results suggest that border inspections are used as a protectionist non tariff barrier

the growth of uk companies and their contribution to job generation 1985 1987 theories of firm growth are reviewed and various models examined the firm growth and job generation process in the uk over the period 1985 87 is examined empirically by using the very large data files of the dun and bradstreet credit rating organisation in the analysis four computer processes were carried out the sorting and matching of files the cleaning of the data the validation of the cleaned data and the scaling up the results the final adjusted data were grossed up to provide an overview of the growth and job generation potential of uk firms this is compared with past results for the periods 1971 81 and 1982 84 small firms performed well providing 48 of all new jobs although consisting of only 21 of all employment in 1985 the 1000 employee range provided only 13 of all new jobs over the period although consisting of 37 of all employment in 1985 an overall trend of positive performance in smaller firms and negative in larger firms was apparent the 20 49 employee cohort performed unusually poorly in firm and job creation against the expected pattern the effect of takeovers mergers and rationalisations on employment was examined as expected there was negligible restructuring of small firms but over 5 of employees in the largest 1000 cohort were involved in some form of reorganisation

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item