Politics and Trade Policy: An Empirical Investigation"
AbstractIn this paper we examine the empirical relevance of three prominent endogenous protection models. Is protection for sale, or do altruistic policy makers worry about political support? We find strong evidence that protection is indeed "for sale." The important new result is, however, that not only the existence of lobbies matters, but also the relative size of the sectoral pro and anti protection contributions. All variables of both the Influence Driven (Grossman and Helpman, 1994) and the Tariff Function (Findlay and Wellisz, 1982) models are significant at the one percent level. Novel is our application of a single, unified theoretical framework to take strict interpretations of the three theoretical models to the data. We thus extend the previous tests of the Influence Driven approach by comparing its performance to well specified alternatives. Using J tests to compare the power of the models directly, we find significant misspecification in the Political Support Function approach. We cannot reject the null hypothesis of correct specification of the Influence Driven model and find evidence of some misspecification in the Tariff Function model.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics at the University of Washington in its series Discussion Papers in Economics at the University of Washington with number 0004.
Date of creation: Oct 2000
Date of revision:
Other versions of this item:
- Theo Eicher & Thomas Osang, 2001. "Politics and Trade Policy: An Empirical Investigation," CESifo Working Paper Series 410, CESifo Group Munich.
- Theo S Eicher & Thomas Osang, 2000. "Politics and Trade Policy: An Empirical Investigation"," Working Papers 0004, University of Washington, Department of Economics.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-04-11 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Grossman, Gene M & Helpman, Elhanan, 1994.
"Protection for Sale,"
American Economic Review,
American Economic Association, vol. 84(4), pages 833-50, September.
- Grossman, Gene & Helpman, Elhanan, 1993. "Protection for Sale," CEPR Discussion Papers 827, C.E.P.R. Discussion Papers.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
- Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
- 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.
- Robert C. Feenstra & Jagdish N. Bhagwati, 1982. "Tariff Seeking and the Efficient Tariff," NBER Chapters, in: Import Competition and Response, pages 245-262 National Bureau of Economic Research, Inc.
- Kishore Gawande, 1998. "Comparing Theories Of Endogenous Protection: Bayesian Comparison Of Tobit Models Using Gibbs Sampling Output," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 128-140, February.
- Giovanni Maggi & Andres Rodriguez-Clare, 1998.
"Import Peneteration and the Politics of Trade Protection,"
NBER Working Papers
6711, National Bureau of Economic Research, Inc.
- Maggi, Giovanni & Rodriguez-Clare, Andres, 2000. "Import penetration and the politics of trade protection," Journal of International Economics, Elsevier, vol. 51(2), pages 287-304, August.
- Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-87, December.
- Rodrik, Dani, 1995. "Political economy of trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 28, pages 1457-1494 Elsevier.
- Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-37, December.
- J. Michael Finger & Ann Harrison, 1996.
"The MFA Paradox: More Protection and More Trade?,"
in: The Political Economy of American Trade Policy, pages 197-260
National Bureau of Economic Research, Inc.
- Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
- 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.
- Ronald Findlay & Stanislaw Wellisz, 1982. "Endogenous Tariffs, the Political Economy of Trade Restrictions, and Welfare," NBER Chapters, in: Import Competition and Response, pages 223-244 National Bureau of Economic Research, Inc.
- Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-60, February.
- Baldwin, Robert E & Magee, Christopher S, 2000.
" Is Trade Policy for Sale? Congressional Voting on Recent Trade Bills,"
Springer, vol. 105(1-2), pages 79-101, October.
- Robert E. Baldwin & Christopher S. Magee, 1998. "Is Trade Policy for Sale? Congressional Voting on Recent Trade Bills," NBER Working Papers 6376, National Bureau of Economic Research, Inc.
- Willmann, Gerald, 2003. "Why Legislators are Protectionists: the Role of Majoritarian Voting in Setting Tariffs," Economics Working Papers 2003,10, Christian-Albrechts-University of Kiel, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel).
If references are entirely missing, you can add them using this form.