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Regional Price Dynamics and Countervailing Duties: Did the Canada-U.S. Hog/Pork Dispute Have a Permanent Impact?

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  • Larue Bruno
  • Tanguay Luc
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    Abstract

    Leamer (1988:53) argues that permanent trade barriers trigger stronger and more lasting responses than temporary ones. We analyze the effects of U.S. countervailing duties (CVDs) imposed on Canadian hog and pork exports by testing the stability of long run arbitrage/cointegration relations between U.S., Quebec and Alberta hog prices. The CVDs induced large deviations from the long run arbitrage relations but these effects vanished with the removal of the pork CVD. Weak exogeneity tests show that the U.S. hog price did not error correct during the dispute period and confirm that CVDs contribute to insulate a large domestic market from foreign competition. [F13]

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal International Economic Journal.

    Volume (Year): 13 (1999)
    Issue (Month): 1 ()
    Pages: 81-101

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    Handle: RePEc:taf:intecj:v:13:y:1999:i:1:p:81-101

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    1. Nancy Higginson & Murray Hawkins & Wiktor Adamowicz, 1988. "Pricing Relationships in Interdependent North American Hog Markets: The Impact of the Countervailing Duty," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 36(3), pages 501-518, November.
    2. Moschini, GianCarlo & Meilke, Karl D., 1992. "Production Subsidy and Countervailing Duties in Vertically Related Markets: The Hog-Pork Case Between Canada and the United States," Staff General Research Papers 572, Iowa State University, Department of Economics.
    3. Larue, Bruno & Ker, Alan, 1993. "World Price Variability versus Protectionism in Agriculture: A Causality Analysis," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 342-46, May.
    4. James R. Melvin, 1985. "The Regional Economic Consequences of Tariffs and Domestic Transportation Costs," Canadian Journal of Economics, Canadian Economics Association, vol. 18(2), pages 237-57, May.
    5. Hansen, Bruce E, 2002. "Tests for Parameter Instability in Regressions with I(1) Processes," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 45-59, January.
    6. Larue, Bruno & Gervais, Jean-Philippe, 1996. "The Impact Of The Canada-U.S. Hog/Pork Trade Dispute On The Composition Of U.S. Pork Imports," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 25(2), October.
    7. Kwiatkowski, D. & Phillips, P.C.B. & Schmidt, P., 1990. "Testing the Null Hypothesis of Stationarity Against the Alternative of Unit Root : How Sure are we that Economic Time Series have a Unit Root?," Papers 8905, Michigan State - Econometrics and Economic Theory.
    8. J. R. Coleman & Karl D. Meilke, 1988. "The Influence of Exchange Rates on Red Meat Trade between Canada and the United States," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 36(3), pages 401-424, November.
    9. Johansen, Søren & Juselius, Katarina, 1992. "Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK," Journal of Econometrics, Elsevier, vol. 53(1-3), pages 211-244.
    10. Edward E. Leamer, 1986. "Cross Section Estimation of the Effects of Trade Barriers," UCLA Economics Working Papers 417, UCLA Department of Economics.
    11. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, September.
    12. Benson, B.L. & Faminow, M.D. & Marquis, M.H. & Sauer, D.G., 1992. "The Impact of Provincial Marketing Boards on Pricing Dynamics in the North American Slaughter Hog Market," Working Papers 1992_12_2, Department of Economics, Florida State University.
    13. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
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