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Suspiciously Timed Trade Disputes

Author

Listed:
  • Paola Conconi

    () (European Center for Advanced Research in Economics and Statistics (ECARES) Université Libre de Bruxelles and Centre for Economic Policy Research (CEPR))

  • David R. DeRemer

    () (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)

  • Georg Kirchsteiger

    () (European Center for Advanced Research in Economics and Statistics (ECARES) Université Libre de Bruxelles also CEPR, CESifo and VCEE)

  • Lorenzo Trimarchi

    () (European Center for Advanced Research in Economics and Statistics (ECARES) Université Libre de Bruxelles)

  • Maurizio Zanardi

    () (Lancaster University Management School)

Abstract

This paper shows that electoral incentives affect the occurrence of trade disputes. Focusing on WTO disputes filed by the United States during the 1995-2012 period, we show that U.S. presidents are more likely to initiate a dispute in the year preceding their re-election date. Moreover, disputes filed by the U.S. tend to target industries that are important to swing states in the presidential election. To explain these regularities, we develop a theoretical model in which an incumbent can file a trade dispute to appeal to voters motivated by reciprocity. The incumbent's ability to initiate a dispute during the re-election campaign provides an advantage over the challenger, who cannot commit to file the dispute if elected. If voters' ideological preferences are not too strong in favor of either candidate, the incumbent will file a trade dispute to increase his re-election chances.

Suggested Citation

  • Paola Conconi & David R. DeRemer & Georg Kirchsteiger & Lorenzo Trimarchi & Maurizio Zanardi, 2015. "Suspiciously Timed Trade Disputes," IEHAS Discussion Papers 1523, Institute of Economics, Centre for Economic and Regional Studies.
  • Handle: RePEc:has:discpr:1523
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    References listed on IDEAS

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    Cited by:

    1. Rotunno, Lorenzo, 2016. "Political stability and trade agreements: Evidence for ‘endgame FTAs’," European Journal of Political Economy, Elsevier, vol. 45(C), pages 133-148.
    2. repec:eee:poleco:v:55:y:2018:i:c:p:455-470 is not listed on IDEAS
    3. repec:eee:chieco:v:51:y:2018:i:c:p:20-41 is not listed on IDEAS
    4. Kuenzel, David J., 2017. "WTO dispute determinants," European Economic Review, Elsevier, vol. 91(C), pages 157-179.
    5. Giovanni Maggi & Robert W. Staiger, 2017. "Learning by Ruling and Trade Disputes," NBER Working Papers 23774, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    trade disputes; elections; reciprocity;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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