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Protectionist responses to the crisis – global trends and implications

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  • Bussière, Matthieu
  • Pérez-Barreiro, Emilia
  • Straub, Roland
  • Taglioni, Daria

Abstract

In this paper we take a systematic look at recent trends in global protectionism and at the potential implications of a protectionist backlash for economic growth, using results from the recent economic literature and new model simulations. We find that there has so far been a moderate increase in actual protectionist measures to restrict trade through tariff and non-tariff barriers. At the same time, evidence from surveys shows that public pressure for more economic protection has been mounting since the mid-2000s, and has possibly intensified since the start of the financial crisis. However, no World Trade Organization (WTO) member has retreated into widespread trade restrictions or protectionism to date. Our model-based simulations suggest that the impairment of the global flow of trade would hamper the recovery from the crisis, as well as the long-term growth potential of the global economy. At the same time, it is unlikely that protectionism would help to correct existing current account imbalances. Moreover, the countries implementing protectionist measures should expect a deterioration of their international competitiveness, which would further affect the potential for longer-term real GDP growth. JEL Classification: E22, E50

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Bibliographic Info

Paper provided by European Central Bank in its series Occasional Paper Series with number 110.

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Date of creation: May 2010
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Handle: RePEc:ecb:ecbops:20100110

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Keywords: competitiveness; financial crisis; global imbalances; Protectionism; Trade; World Trade Organization;

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  1. Philippe Moutot & Alexander Jung & Francesco Paolo Mongelli, 2008. "The working of the eurosystem - monetary policy preparations and decision-making – selected issues," Occasional Paper Series, European Central Bank 79, European Central Bank.
  2. K. H. O'Rourke & R. Sinnott, 2001. "The Determinants of Individual Trade Policy Preferences: International Survey Evidence," Trinity Economics Papers, Trinity College Dublin, Department of Economics 200110, Trinity College Dublin, Department of Economics.
  3. Cappiello, Lorenzo & Gérard, Bruno & Kadareja, Arjan & Manganelli, Simone, 2006. "Financial integration of new EU Member States," Working Paper Series, European Central Bank 0683, European Central Bank.
  4. Barhoumi, K. & Rünstler, G. & Cristadoro, R. & Den Reijer, A. & Jakaitiene, A. & Jelonek, P. & Rua, A. & Ruth, K. & Benk, S. & Van Nieuwenhuyze, C., 2008. "Short-term forecasting of GDP using large monthly datasets: a pseudo real-time forecast evaluation exercise," Working papers, Banque de France 215, Banque de France.
  5. Herrmann, Sabine & Winkler, Adalbert, 2008. "Financial markets and the current account: emerging Europe versus emerging Asia," Discussion Paper Series 1: Economic Studies, Deutsche Bundesbank, Research Centre 2008,05, Deutsche Bundesbank, Research Centre.
  6. Antoine Bou�t & Yvan Decreux & Lionel Fontagné & Sébastien Jean & David Laborde, 2008. "Assessing Applied Protection across the World," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 16(5), pages 850-863, November.
  7. Robert Kaufmann & Pavlos Karadeloglou & Filippo di Mauro, 2008. "Will oil prices decline over the long run?," Occasional Paper Series, European Central Bank 98, European Central Bank.
  8. Amelia Santos-Paulino & A. P. Thirlwall, 2004. "The impact of trade liberalisation on exports, imports and the balance of payments of developing countries," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(493), pages F50-F72, 02.
  9. Thierry Bracke & Matthieu Bussière & Michael Fidora & Roland Straub, 2008. "A framework for assessing global imbalances," Occasional Paper Series, European Central Bank 78, European Central Bank.
  10. Roland Beck & Michael Fidora, 2008. "The impact of sovereign wealth funds on global financial markets," Intereconomics: Review of European Economic Policy, Springer, Springer, vol. 43(6), pages 349-358, November.
  11. Zbigniew Polanski & Adalbert Winkler, 2008. "Russia, EU enlargement and the euro," Occasional Paper Series, European Central Bank 93, European Central Bank.
  12. Magdalena Morgese Borys & Éva Katalin Polgár & Andrei Zlate, 2008. "Real convergence and the determinants of growth in EU candidate and potential candidate countries - a panel data approach," Occasional Paper Series, European Central Bank 86, European Central Bank.
  13. Markus Baltzer & Lorenzo Cappiello & Roberto A. De Santis & Simone Manganelli, 2008. "Measuring financial integration in new EU member states," Occasional Paper Series, European Central Bank 81, European Central Bank.
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Cited by:
  1. Beirne, John & Dalitz, Lars & Ejsing, Jacob & Grothe, Magdalena & Manganelli, Simone & Monar, Fernando & Sahel, Benjamin & Sušec, Matjaž & Tapking, Jens & Vong, Tana, 2011. "The impact of the Eurosystem's covered bond purchase programme on the primary and secondary markets," Occasional Paper Series, European Central Bank 122, European Central Bank.
  2. Bown, Chad P. & Crowley, Meredith A., 2013. "Emerging economies, trade policy, and macroeconomic shocks," Policy Research Working Paper Series, The World Bank 6315, The World Bank.
  3. di Mauro, Filippo & Forster, Katrin & Lima, Ana, 2010. "The global downturn and its impact on euro area exports and competitiveness," Occasional Paper Series, European Central Bank 119, European Central Bank.
  4. Gardó, Sándor & Martin, Reiner, 2010. "The impact of the global economic and financial crisis on central, eastern and south-eastern Europe: A stock-taking exercise," Occasional Paper Series, European Central Bank 114, European Central Bank.
  5. An IRC expert group of the ESCB, 2010. "Financial stability challenges in EU candidate countries - Financial systems in the aftermath of the global crisis," Occasional Paper Series, European Central Bank 115, European Central Bank.
  6. Sturm, Michael & Sauter, Nicolas, 2010. "The impact of the global financial turmoil and recession on Mediterranean countries’ economies," Occasional Paper Series, European Central Bank 118, European Central Bank.
  7. Hess, Patrick, 2010. "Securities clearing and settlement in China: markets, infrastructures and policy-making," Occasional Paper Series, European Central Bank 116, European Central Bank.
  8. Bradley J. McDonald & Christian Henn, 2011. "Protectionist Responses to the Crisis," IMF Working Papers, International Monetary Fund 11/139, International Monetary Fund.
  9. Rob Gregory & Christian Henn & Brad Mcdonald & Mika Saito, 2010. "Trade And The Crisis: Protect Or Recover," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., vol. 1(02), pages 165-181.
  10. Bodea, Cristina & Huemer, Stefan, 2010. "Dancing together at arm’s length? – The interaction of central banks with governments in the G7," Occasional Paper Series, European Central Bank 120, European Central Bank.
  11. Stolz, Stéphanie Marie & Wedow, Michael, 2010. "Extraordinary measures in extraordinary times – Public measures in support of the financial sector in the EU and the United States," Occasional Paper Series, European Central Bank 117, European Central Bank.
  12. repec:imf:imfwpa:11/139:9 is not listed on IDEAS
  13. Holm-Hadulla, Fédéric & Kamath, Kishore & Lamo, Ana & Pérez, Javier J. & Schuknecht, Ludger, 2010. "Public wages in the euro area - towards securing stability and competitiveness," Occasional Paper Series, European Central Bank 112, European Central Bank.
  14. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2010. "Exports and sectoral financial dependence: evidence on French firms during the great global crisis," Working Paper Series, European Central Bank 1227, European Central Bank.
  15. Demeter, Krisztina, 2014. "Operating internationally—The impact on operational performance improvement," International Journal of Production Economics, Elsevier, Elsevier, vol. 149(C), pages 172-182.
  16. repec:imf:imfwpa:11/139:99 is not listed on IDEAS
  17. Chauvin, Nicolas Depetris & Ramos, Maria Priscila, 2013. "The welfare effect of the new wave of protectionism: The case of Argentina," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 151626, Agricultural and Applied Economics Association.
  18. Task Force of the Monetary Policy Committee of the ESCB, 2010. "Energy markets and the euro area macroeconomy," Occasional Paper Series, European Central Bank 113, European Central Bank.

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