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The Effects of Antidumping Duties in a New Open Economy Macroeconomics Model

Author

Listed:
  • Chung-Fu Lai

    (Department of Applied Economics, Fo Guang University, Yilan County, Taiwan)

  • Xi-Tsz Lee

    (Department of Applied Economics, Fo Guang University, Yilan County, Taiwan.)

Abstract

This paper presents New Open Economy Macroeconomics as the analytical framework in attempt to integrate the characteristics of imperfect competition market and antidumping behavior into a two-country (home country and foreign country) model with micro-foundation. We analyze the long-term effect of implementing antidumping duty in home country on various microeconomic variables (i.e. consumption, output, price, exchange rate, and terms of trade [TOT]) when foreign country engage in dumping behaviors toward the home country. Theoretical inference and simulation analysis of this paper suggests a positive correlation between antidumping duty and domestic consumption, foreign consumption, world consumption, domestic price index, foreign price index, and exchange rate; whereas a negative correlation between antidumping duty and the domestic output, foreign output, and TOT. Moreover, the level of volatility in all macroeconomic variables rises when the ratio of export product price selling below its retail price in home country expands.

Suggested Citation

  • Chung-Fu Lai & Xi-Tsz Lee, 2016. "The Effects of Antidumping Duties in a New Open Economy Macroeconomics Model," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 837-844.
  • Handle: RePEc:eco:journ1:2016-03-3
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    References listed on IDEAS

    as
    1. Obstfeld, Maurice & Rogoff, Kenneth, 1995. "Exchange Rate Dynamics Redux," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 624-660, June.
    2. Thomas J. Prusa, 1997. "The Trade Effects of U.S. Antidumping Actions," NBER Chapters,in: The Effects of U.S. Trade Protection and Promotion Policies, pages 191-214 National Bureau of Economic Research, Inc.
    3. Robert W. Staiger & Frank A. Wolak, 1994. "Measuring Industry-Specific Protection: Antidumping in the United States," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1994 Micr), pages 51-118.
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    More about this item

    Keywords

    Antidumping Duties; Micro-foundation; New Open Economy Macroeconomics;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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