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Growth, real exchange rates and trade protectionism since the financial crisis

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  • Georgiadis, Georgios
  • Gräb, Johannes

Abstract

Existing evidence suggests that protectionist activity since the financial crisis has been muted, raising the question whether the historically well-documented relationship between growth, real exchange rates and trade protectionism has broken down. This paper re-visits this relationship for the time period since 2009. To this end, we use a novel and comprehensive dataset which considers a wide range of trade policies stretching beyond the traditionally considered tariff and trade defence measures. We find that the specter of protectionism has not been banished: Countries continue to pursue more trade-restrictive policies when they experience recessions and/or when their competitiveness deteriorates through an appreciation of the real exchange rate; and this finding holds for a wide array of contemporary trade policies, including JEL Classification: F13, F14

Suggested Citation

  • Georgiadis, Georgios & Gräb, Johannes, 2013. "Growth, real exchange rates and trade protectionism since the financial crisis," Working Paper Series 1618, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20131618
    Note: 2435756
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    References listed on IDEAS

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    Cited by:

    1. Agnès Bénassy-Quéré & Matthieu Bussière & Pauline Wibaux, 2018. "Trade and currency weapons," Working Papers 2018-08, CEPII research center.
    2. Luisa Kinzius & Alexander Sandkamp & Erdal Yalcin, 2019. "Trade protection and the role of non-tariff barriers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(4), pages 603-643, November.
    3. Enrico D'Elia & Roberta De Santis, 2018. "Growth divergence and income inequality in OECD countries:the role of trade and financial openness," Working Papers LuissLab 18140, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    4. Charis Vlados, 2020. "The Dynamics of the Current Global Restructuring and Contemporary Framework of the US–China Trade War," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 12(1), pages 4-23, January.
    5. Fiorentini, Riccardo, 2020. "The Persisting US Trade Deficit: Is Protectionistm the Right Answer?," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(2), pages 155-186.
    6. Andrei Zlate & Federico Mandelman, 2013. "Offshoring, Low-skilled Immigration and Labor Market Polarization," 2013 Meeting Papers 1073, Society for Economic Dynamics.
    7. Mulatu, Abay, 2016. "On the concept of 'competitiveness' and its usefulness for policy," Structural Change and Economic Dynamics, Elsevier, vol. 36(C), pages 50-62.
    8. Scott Urban, 2014. "Policy Options for the Euro: Heterodoxy Ahead," Journal of Common Market Studies, Wiley Blackwell, vol. 52(4), pages 742-757, July.
    9. Cabrillac, Bruno & Al-Haschimi, Alexander & Babecká Kucharčuková, Oxana & Borin, Alessandro & Bussière, Matthieu & Cezar, Raphael & Derviz, Alexis & Dimitropoulou, Dimitra & Ferrara, Laurent & Gächter, 2016. "Understanding the weakness in global trade - What is the new normal?," Occasional Paper Series 178, European Central Bank.
    10. Hanna Armelius & Carl-Johan Belfrage & Hanna Stenbacka, 2014. "The Mystery of the Missing Growth in World Trade after the Global Financial Crisis," EcoMod2014 6933, EcoMod.
    11. Isabel Camisão & Maria Helena Guimarães, 2017. "The Commission, the Single Market and the Crisis: The Limits of Purposeful Opportunism," Journal of Common Market Studies, Wiley Blackwell, vol. 55(2), pages 223-239, March.

    More about this item

    Keywords

    exchanges rates; growth; trade protectionism;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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