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Protectionism during the crisis: Tit-for-tat or chicken games?

Author

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  • Boffa, Mauro
  • Olarreaga, Marcelo

Abstract

During the recent financial crisis many countries resorted to protectionist measures to try to boost demand for domestically-produced goods. In this paper we explore the extent to which the adoption of protectionist measures led to retaliation by other countries undermining the increase in demand. We found no evidence of retaliation. On the contrary, there is strong evidence of chicken-games being played. Indeed, the probability of a protectionist measure being imposed on a trading partner's export bundle is significantly smaller when the partner imposes a protectionist measure on home exports.

Suggested Citation

  • Boffa, Mauro & Olarreaga, Marcelo, 2012. "Protectionism during the crisis: Tit-for-tat or chicken games?," CEPR Discussion Papers 9119, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9119
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    References listed on IDEAS

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    1. Giovanni Maggi & Andrés Rodríguez-Clare, 2007. "A Political-Economy Theory of Trade Agreements," American Economic Review, American Economic Association, vol. 97(4), pages 1374-1406, September.
    2. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, Taylor & Francis Journals, pages 238-249.
    3. Hiau Looi Kee & Cristina Neagu & Alessandro Nicita, 2013. "Is Protectionism on the Rise? Assessing National Trade Policies during the Crisis of 2008," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 342-346, March.
    4. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
    5. Douglas A. Irwin, 1998. "The Smoot-Hawley Tariff: A Quantitative Assessment," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 326-334, May.
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    Cited by:

    1. Marie-Laure Cabon-Dhersin & Nathalie Etchart-Vincent, 2013. "Wording and gender effects in a Game of Chicken. An explorative experimental study," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00796708, HAL.
    2. Robert Grundke & Christoph Moser, 2014. "Hidden Protectionism? Evidence from Non-tariff Barriers to Trade in the United States," CESifo Working Paper Series 5142, CESifo Group Munich.
    3. Georgios Georgiadis & Johannes Gräb, 2016. "Growth, Real Exchange Rates and Trade Protectionism since the Financial Crisis," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 1050-1080, November.

    More about this item

    Keywords

    Chicken-games; Financial crisis; Trade Retaliation;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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