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Divided government and U.S. trade policy: theory and evidence

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  • Lohmann, Susanne
  • O'Halloran, Sharyn

Abstract

If different parties control the U.S. Congress and White House, the United States may maintain higher import protection than otherwise. This proposition follows from a distributive politics model in which Congress can choose to delegate trade policymaking to the President. When the congressional majority party faces a President of the other party, the former has an incentive to delegate to but to constrain the President by requiring congressional approval of trade proposals by up-or-down vote. This constraint forces the President to provide higher protection in order to assemble a congressional majority. Evidence confirms that (1) the institutional constraints placed on the President's trade policymaking authority are strengthened in times of divided government and loosened under unified government and (2) U.S. trade policy was significantly more protectionist under divided than under unified government during the period 1949–90.

Suggested Citation

  • Lohmann, Susanne & O'Halloran, Sharyn, 1994. "Divided government and U.S. trade policy: theory and evidence," International Organization, Cambridge University Press, vol. 48(4), pages 595-632, October.
    • Handle: RePEc:cup:intorg:v:48:y:1994:i:04:p:595-632_02
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    Cited by:

    1. Paola Conconi & Giovanni Facchini & Maurizio Zanardi, 2012. "Fast-Track Authority and International Trade Negotiations," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 146-189, August.
    2. Dreher, Axel & Voigt, Stefan, 2011. "Does membership in international organizations increase governments' credibility? Testing the effects of delegating powers," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 326-348, September.
    3. repec:eee:inecon:v:108:y:2017:i:c:p:226-242 is not listed on IDEAS
    4. Sojli, Elvira & Tham, Wing Wah, 2015. "Divided governments and futures prices," Journal of Econometrics, Elsevier, vol. 187(2), pages 622-633.
    5. Gawande, Kishore & Krishna, Pravin & Olarreaga, Marcelo, 2009. "What Governments Maximize and Why: The View from Trade," International Organization, Cambridge University Press, vol. 63(3), pages 491-532, July.
    6. Levent Celik & Bilgehan Karabay & John McLaren, 2015. "When Is It Optimal to Delegate: The Theory of Fast-Track Authority," American Economic Journal: Microeconomics, American Economic Association, vol. 7(3), pages 347-389, August.
    7. Kim, Chansog (Francis) & Pantzalis, Christos & Chul Park, Jung, 2012. "Political geography and stock returns: The value and risk implications of proximity to political power," Journal of Financial Economics, Elsevier, vol. 106(1), pages 196-228.
    8. Henisz, Witold J. & Zelner, Bennet A., 2006. "Interest Groups, Veto Points, and Electricity Infrastructure Deployment," International Organization, Cambridge University Press, vol. 60(1), pages 263-286, January.
    9. Gary Winslett, 2016. "Public Opinion Distribution and Party Competition in US Trade Policy," The World Economy, Wiley Blackwell, vol. 39(8), pages 1128-1145, August.
    10. Johannes Urpelainen, 2011. "Early birds: Special interests and the strategic logic of international cooperation," The Review of International Organizations, Springer, vol. 6(2), pages 113-140, July.
    11. Mat McCubbins & Roger Noll & Barry Weingast, 2005. "The Political Economy of Law: Decision-Making by Judicial, Legislative, Executive and Administrative Agencies," Discussion Papers 04-035, Stanford Institute for Economic Policy Research.
    12. J. Broz, 2011. "The United States Congress and IMF financing, 1944–2009," The Review of International Organizations, Springer, vol. 6(3), pages 341-368, September.
    13. Sherman, Richard, 2002. "Import prices and the political economy of tariffs: evidence from Germany, Japan, and the United States, 1954-1994," Economics Letters, Elsevier, vol. 76(1), pages 11-17, June.
    14. Trofimov, Ivan D., 2017. "Political economy of trade protection and liberalization: in search of agency-based and holistic framework of policy change," MPRA Paper 79504, University Library of Munich, Germany.
    15. Levent Celik & Bilgehan Karabay & John McLaren, 2018. "Fast-Track Authority: A Hold-Up Interpretation," NBER Working Papers 24427, National Bureau of Economic Research, Inc.
    16. Kim, Kwang-ho, 2007. "Favoritism and reverse discrimination," European Economic Review, Elsevier, vol. 51(1), pages 101-123, January.

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