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Protectionism and international trade: A long-run view

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  • Gregori, Tullio

Abstract

This paper investigates the long-run relationship between international trade and protectionism, which is measured by a sub-component of the KOF globalization index using a standard import model with a heterogeneous balanced panel of 34 countries from 1970 to 2017. The model is tested using GDP and the Import Intensity-Adjusted Demand (IAD) as an activity variable for a performance comparison. Both specifications are estimated using recent advances in the panel autoregressive distributed lag model literature with cross-sectional dependence. The cross-sectional autoregressive distributed lag (CS-ARDL) and the cross-sectional distributed lag (CS-DL) models provide similar results. Mean group estimates show a proportional impact of IAD on international trade whilst the GDP effect is larger. The long-run protectionism elasticity is always negative and significant but less than half of the import price elasticity.

Suggested Citation

  • Gregori, Tullio, 2021. "Protectionism and international trade: A long-run view," International Economics, Elsevier, vol. 165(C), pages 1-13.
    • Handle: RePEc:eee:inteco:v:165:y:2021:i:c:p:1-13
    DOI: 10.1016/j.inteco.2020.11.001
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    More about this item

    Keywords

    Trade; Protectionism; Long-run elasticities; Panel distributed lags;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F69 - International Economics - - Economic Impacts of Globalization - - - Other

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