Real Exchange Rates and Trade Protectionism
AbstractReal exchange rate movements are robustly related to the rise and fall of trade protectionism. I demonstrate this by presenting a theoretical model that incorporates the real exchange rate into a standard factor proportions model of trade policy preferences. The model demonstrates why some firms trade policy preferences, and thus total demands for protectionism, change in response to real exchange rate movements. I evaluate the model with data on antidumping investigations in six industrialized countries between the late 1970s and 2004. The exercise suggests that the real exchange rate hypothesis offers a more compelling explanation for protectionist waves than the business cycle hypothesis.
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Bibliographic InfoArticle provided by De Gruyter in its journal Business and Politics.
Volume (Year): 12 (2010)
Issue (Month): 2 (August)
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Web page: http://www.degruyter.com
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- Alessandro Nicita, 2013.
"Exchange rates, international trade and trade policies,"
CEPII research center, issue 135-136, pages 47-61.
- Alessandro Nicita, 2013. "Exchange Rates, International Trade And Trade Policies," UNCTAD Blue Series Papers 56, United Nations Conference on Trade and Development.
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