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Re-examination of the Mayer Median Voter Model of Trade Policy

  • Dhingra, Swati

This paper examines the empirical validity of the Mayer-Heckscher-Ohlin (M-H-O) model. We test the inequality-tariff relationship studied by Dutt & Mitra (2002) as well as a large country version of Mayer’s model. Dutt and Mitra (2002) found support for the inequality-tariff implication of the model for a cross-section of countries in the 1980s, using physical capital and labor as the two factors in the MH- O model. Our results suggest that this finding is not robust. Instead, we find that when human capital and (unskilled) labor are taken as relevant factors, the Mayer implication is validated in the 1980s. Using cross-sectional country data, we also find that the Mayer implication holds for the 1990s with either physical capital or human capital. We discuss possible explanations for the different findings in the two periods. We extend the model to a large country and obtain tariff levels which are a function of the median voter component and a terms of trade factor. For the 1990s, the positive impact of terms of trade considerations on tariff levels across countries is validated. Using human capital, we find that the median voter component has a negative impact on tariffs in labor-abundant countries and a positive impact in capital-abundant countries.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 892.

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Date of creation: 30 Jan 2006
Date of revision: 14 Nov 2006
Handle: RePEc:pra:mprapa:892
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  1. James E. Anderson & J. Peter Neary, 1999. "The Mercantilist Index of Trade Policy," NBER Working Papers 6870, National Bureau of Economic Research, Inc.
  2. Edward J. Balistreri, 1997. "The Performance of the Heckscher-Ohlin-Vanek Model in Predicting Endogenous Policy Forces at the Individual Level," Canadian Journal of Economics, Canadian Economics Association, vol. 30(1), pages 1-17, February.
  3. K. H. O'Rourke & R. Sinnott, 2001. "The Determinants of Individual Trade Policy Preferences: International Survey Evidence," CEG Working Papers 20016, Trinity College Dublin, Department of Economics.
  4. Greenaway, David & Morgan, Wyn & Wright, Peter, 1997. "Trade liberalization and growth in developing countries: Some new evidence," World Development, Elsevier, vol. 25(11), pages 1885-1892, November.
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  7. Mayda, Anna Maria & Rodrik, Dani, 2001. "Why are Some People (and Countries) More Protectionist than Others?," CEPR Discussion Papers 2960, C.E.P.R. Discussion Papers.
  8. Hongyi Li & Lyn Squire & Heng-fu Zou, 1998. "Explaining International and Intertemporal Variations in Income Inequality," CEMA Working Papers 73, China Economics and Management Academy, Central University of Finance and Economics.
  9. Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
  10. Gene M. Grossman & Elhanan Helpman, 1993. "Trade Wars and Trade Talks," NBER Working Papers 4280, National Bureau of Economic Research, Inc.
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  13. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
  14. Olarreaga, Marcelo & Soloaga, Isidro & Winters, Alan, 1999. "What's behind MERCOSUR's common external tariff?," Policy Research Working Paper Series 2231, The World Bank.
  15. Balassa, Bela, 1979. "The Changing Pattern of Comparative Advantage in Manufactured Goods," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 259-66, May.
  16. Pinelopi Koujianou Goldbe & Giovanni Maggi, 1997. "Protection for Sale: An Empirical Investigation," NBER Working Papers 5942, National Bureau of Economic Research, Inc.
  17. Dutt, Pushan & Mitra, Devashish, 2002. "Endogenous trade policy through majority voting: an empirical investigation," Journal of International Economics, Elsevier, vol. 58(1), pages 107-133, October.
  18. Gary S. Becker, 1975. "Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition," NBER Books, National Bureau of Economic Research, Inc, number beck75-1, October.
  19. Eugene Beaulieu & Christopher Magee, 2004. "Four Simple Tests of Campaign Contributions and Trade Policy Preferences," Economics and Politics, Wiley Blackwell, vol. 16(2), pages 163-187, 07.
  20. Scheve, Kenneth F. & Slaughter, Matthew J., 2001. "What determines individual trade-policy preferences?," Journal of International Economics, Elsevier, vol. 54(2), pages 267-292, August.
  21. Branson, William H. & Monoyios, Nikolaos, 1977. "Factor inputs in U.S. trade," Journal of International Economics, Elsevier, vol. 7(2), pages 111-131, May.
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