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A theory of trade policy under dictatorship and democratization

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  • Zissimos, Ben

Abstract

This paper develops a new model of trade policy under dictatorship and democratization. The paper makes two contributions. One is to provide a deeper understanding of the relationship between political institutions and economic efficiency by studying the endogenous interaction between the form of government and trade policy. The paper's second contribution is to show how a dictatorship can manipulate trade policy to maintain its grip on power in the face of permanent world price shocks, thus opening the door to a re-examination of trade policy responses to technology shocks. The model is used to explain an interesting episode of trade policymaking between 1815 and 1846, during which time Britain substantially liberalized trade while Prussia, on the other side of the grain market, significantly increased protectionism.

Suggested Citation

  • Zissimos, Ben, 2017. "A theory of trade policy under dictatorship and democratization," Journal of International Economics, Elsevier, vol. 109(C), pages 85-101.
  • Handle: RePEc:eee:inecon:v:109:y:2017:i:c:p:85-101
    DOI: 10.1016/j.jinteco.2017.08.007
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    Cited by:

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    2. Ben Zissimos, 2015. "World Price Shocks, Income, and Democratization," World Bank Economic Review, World Bank Group, vol. 29(suppl_1), pages 145-154.
    3. Christian Ruckteschler & Adeel Malik & Ferdinand Eib, 2019. "The Politics of Trade Protection: Evidence from an EU-mandated Tari Liberalization in Morocco," CSAE Working Paper Series 2019-12, Centre for the Study of African Economies, University of Oxford.
    4. Evans, Olaniyi, 2019. "The effects of US-China trade war and Trumponomics," MPRA Paper 93682, University Library of Munich, Germany.

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    More about this item

    Keywords

    Commitment problem; Efficiency; Fiscal capacity; Institutions; Trade policy;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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