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Lobbying and Agricultural Trade Policy in the United States

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  • Gawande, Kishore
  • Hoekman, Bernard

Abstract

This article studies whether political campaign contributions influence agricultural protection in the United States in the manner suggested by the political economy model of Grossman and Helpman (1994). This is the first attempt to test this model using agricultural data. We test the model using a detailed cross-sectional data set of agricultural protection, subsidies, and PAC contributions in the late 1990s. The model is qualitatively affirmed by the data. We make a novel attempt to solve a puzzle about the model s quantitative implications, also found in recent studies. This solution makes the simple model consistent with the complicated decision-making process in real-world government. The results imply the underpinnings of a political economy equilibrium that will be hard to dislodge.This article has benefited greatly from the insightful comments of the editor and two anonymous referees. We thank Marcelo Olarreaga for access to valuable data on agricultural protection and subsidies. We accept responsibility for any remaining errors. The views expressed are our own and should not be attributed to the World Bank.

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Bibliographic Info

Article provided by Cambridge University Press in its journal International Organization.

Volume (Year): 60 (2006)
Issue (Month): 03 (July)
Pages: 527-561

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Handle: RePEc:cup:intorg:v:60:y:2006:i:03:p:527-561_06

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References

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  1. Stratmann, Thomas, 1992. "The Effects of Logrolling on Congressional Voting," American Economic Review, American Economic Association, vol. 82(5), pages 1162-76, December.
  2. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
  3. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  4. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
  5. Bernard Hoekman & David Vines, 2007. "Multilateral trade cooperation: what next?," Oxford Review of Economic Policy, Oxford University Press, vol. 23(3), pages 311-334, Autumn.
  6. Gardner, Bruce L, 1987. "Causes of U.S. Farm Commodity Programs," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 290-310, April.
  7. Glenn Parker & Suzanne Parker, 1998. "The economic organization of legislatures and how it affects congressional voting," Public Choice, Springer, vol. 95(1), pages 117-129, April.
  8. Kishore Gawande & Usree Bandyopadhyay, 2000. "Is Protection for Sale? Evidence on the Grossman-Helpman Theory of Endogenous Protection," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 139-152, February.
  9. Bernard Hoekman & Francis Ng & Marcelo Olarreaga, 2004. "Agricultural Tariffs or Subsidies: Which Are More Important for Developing Economies?," World Bank Economic Review, World Bank Group, vol. 18(2), pages 175-204.
  10. Devashish Mitra & Dimitrios D. Thomakos & Mehmet A. Ulubaşoglu, 2002. ""Protection For Sale" In A Developing Country: Democracy Vs. Dictatorship," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 497-508, August.
  11. Hiau Looi Kee & Nicita, Alessandro & Olarreaga, Marcelo, 2004. "Import demand elasticities and trade distortions," Policy Research Working Paper Series 3452, The World Bank.
  12. Theo Eicher & Thomas Osang, 2002. "Protection for Sale: An Empirical Investigation: Comment," American Economic Review, American Economic Association, vol. 92(5), pages 1702-1710, December.
  13. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
  14. Rigoberto A. Lopez, 2001. "Campaign Contributions and Agricultural Subsidies," Economics and Politics, Wiley Blackwell, vol. 13(3), pages 257-279, November.
  15. Phillip McCalman, 2004. "Protection for Sale and Trade Liberalization: an Empirical Investigation," Review of International Economics, Wiley Blackwell, vol. 12(1), pages 81-94, 02.
  16. Olper, Alessandro, 1998. "Political Economy Determinants of Agricultural Protection Levels in EU Member States: An Empirical Investigation," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(4), pages 463-87.
  17. Parker, Glenn R & Parker, Suzanne L, 1998. " The Economic Organization of Legislatures and How It Affects Congressional Voting," Public Choice, Springer, vol. 95(1-2), pages 117-29, April.
  18. Gawande, Kishore, 2005. "The structure of lobbying and protection in U.S. agriculture," Policy Research Working Paper Series 3722, The World Bank.
  19. kishore gawande & pravin krishna, 2005. "The Political Economy of Trade Policy: Empirical Approaches," International Trade 0503003, EconWPA.
  20. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
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Cited by:
  1. Kym Anderson & Gordon Rausser & Johan Swinnen, 2012. "Political Economy of Public Policies: Insights from Distortions to Agricultural and Food Markets," Departmental Working Papers 2012-18, The Australian National University, Arndt-Corden Department of Economics.
  2. John Gilbert & Reza Oladi, 2011. "Net Campaign Contributions, Agricultural Interests, and Votes on Liberalizing Trade with China," Working Papers 201102, Utah State University, Department of Economics and Finance.
  3. Clas Eriksson, 2011. "Home bias in preferences and the political economics of agricultural protection," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 92(1), pages 5-23.
  4. Dutt, Pushan & Mitra, Devashish, 2009. "Explaining Agricultural Distortion Patterns : The Roles of Ideology, Inequality, Lobbying and Public Finance," Agricultural Distortions Working Paper 50299, World Bank.

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