Testing the theory of trade policy
Subtitle: evidence from the abrupt end of the multifibre arrangement
By: James Harrigan, Geoffrey Barrows
Contributors: Barrows, Geoffrey; National Bureau of Economic Research
Series: NBER working paper series -- working paper 12579; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 12579.
Publisher: National Bureau of Economic Research
Published: 2006
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] :
Description: "Quota restrictions on United States imports of apparel and textiles under the multifibre arrangement (MFA) ended abruptly in January 2005.  This change in policy was large, predetermined, and fully anticipated, making it an ideal natural experiment for testing the theory of trade policy.  We focus on simple and robust theory predictions about the effects of binding quotas, and also compute nonparametric estimates of the cost of the MFA.  We find that prices of quota constrained categories from China fell by 38% in 2005, while prices in unconstrained categories from China and from other countries changed little.  We also find substantial quality downgrading in imports from China in previously constrained categories, as predicted by theory.  The annual cost of the MFA to U.S.  consumers was about $100 per household"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 10/13/2006.

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