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The Empire Project: Trade Policy in Interwar Canada

Author

Listed:
  • Lampe , Markus

    (WU-Vienna)

  • Hjortshøj O’Rourke , Kevin

    (NYU Abu Dhabi)

  • Reiter , Lorenz

    (WU-Vienna)

  • Yotov, Yoto

    (Drexel University)

Abstract

This paper uses a new dataset on the universe of Canadian imports and tariffs between 1924 and 1936, disaggregated into 1697 goods originating in 112 countries, to analyze the impact on Canadian imports of interwar Canadian trade policy, including the 1932 Ottawa trade agreements. Rather than use a dummy variable approach, we compute the impact of individual tariffs which varied substantially across goods, trade partners, and time. We develop a novel method of controlling for multilateral resistances in the context of a one-country dataset, and perform a variety of counterfactual exercises to determine the impact of tariffs on trade flows. The overall impact of post-1929 tariff shifts, including the 1932 agreements, was relatively small, reflecting the fact that Canadian trade policy was already highly protectionist: trade agreements can have heterogeneous effects on participants because the shocks involved are different. Compared with a free trade counterfactual, the impact of the overall structure of protection on the level and composition of trade was large.

Suggested Citation

  • Lampe , Markus & Hjortshøj O’Rourke , Kevin & Reiter , Lorenz & Yotov, Yoto, 2023. "The Empire Project: Trade Policy in Interwar Canada," School of Economics Working Paper Series 2023-5, LeBow College of Business, Drexel University.
    • Handle: RePEc:ris:drxlwp:2023_005
    as

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    References listed on IDEAS

    as
    1. James E. Anderson & J. Peter Neary, 1996. "A New Approach to Evaluating Trade Policy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(1), pages 107-125.
    2. Felbermayr, Gabriel & Yotov, Yoto V., 2021. "From theory to policy with gravitas: A solution to the mystery of the excess trade balances," European Economic Review, Elsevier, vol. 139(C).
    3. Baier, Scott L. & Yotov, Yoto V. & Zylkin, Thomas, 2019. "On the widely differing effects of free trade agreements: Lessons from twenty years of trade integration," Journal of International Economics, Elsevier, vol. 116(C), pages 206-226.
    4. Lorenzo Caliendo & Fernando Parro, 2015. "Estimates of the Trade and Welfare Effects of NAFTA," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(1), pages 1-44.
    5. Peter H. Egger & Mario Larch & Yoto V. Yotov, 2022. "Gravity Estimations with Interval Data: Revisiting the Impact of Free Trade Agreements," Economica, London School of Economics and Political Science, vol. 89(353), pages 44-61, January.
    6. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Trade policy; Trade Agreements; Interwar Tariffs; Multilateral Resistances; Trade Elasticities; Canada; Empire;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • N72 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: 1913-

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