a column by Michael Bordo and Mickey Levy for VOX: CEPR’s Policy Portal
The history of tariffs and immigration and capital barriers provides clear lessons of the potentially sizeable economic costs of anti-globalisation policies.
This column describes how the US-China tariff war and policy-related uncertainties are harming economic performance, and are also distorting the Federal Reserve’s monetary policy and undermining its credibility and independence. Tariffs and discretionary monetary policy are a toxic mix, and the authors encourage a de-escalation of burdensome barriers to trade and urge the Fed to adopt a systematic, rules-based approach to monetary policy.
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Showing posts with label protectionism. Show all posts
Showing posts with label protectionism. Show all posts
Friday, 25 October 2019
Monday, 14 October 2019
Multinational enterprises in time and space: The effect of trade policy shocks
a column by Stefania Garetto, Lindsay Oldenski and Natalia Ramondo for VOX: CEPR’s Policy Portal
Multinational enterprises play an important role in coordinating production around the globe.
This column presents a dynamic quantitative model of multinational enterprise expansion that can be used to analyse the effects of policies that affect the cost of the operations of such firms. It uses this model to estaimte the impact of potential implementations of Brexit.
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Multinational enterprises play an important role in coordinating production around the globe.
This column presents a dynamic quantitative model of multinational enterprise expansion that can be used to analyse the effects of policies that affect the cost of the operations of such firms. It uses this model to estaimte the impact of potential implementations of Brexit.
Continue reading
Thursday, 26 September 2019
The 'new' economics of trade agreements
a column by Gene Grossman, Phillip McCalman and Robert Staiger for VOX: CEPR’s Policy Portal
While tariffs have significantly been reduced in the last decades, other barriers to trade, such as differing regulations across countries, continue to pose obstacles.
This column presents a new framework to analyse how different forms of trade agreements can address these non-tariff barriers. For various economic environments, it discusses whether and how these treaties can achieve global efficiency.
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While tariffs have significantly been reduced in the last decades, other barriers to trade, such as differing regulations across countries, continue to pose obstacles.
This column presents a new framework to analyse how different forms of trade agreements can address these non-tariff barriers. For various economic environments, it discusses whether and how these treaties can achieve global efficiency.
Continue reading
Friday, 20 September 2019
Rules of origin: Largely unnecessary, simply protectionist
a column by Gabriel Felbermayr, Feodora Teti and Erdal Yalcin for VOX: CEPR’s Policy Portal
Rules of origin exist to avoid trade deflection, but they distort global value chains and are costly to abide by.
This column shows empirically that in preferential trade agreements, trade deflection is unlikely to be profitable because tariffs are generally low, that countries in a common free trade agreement tend to have similar external tariff levels, and that when tariff levels differ, deflection is profitable at most for one country in the pair. Moreover, transportation costs create a natural counterforce.
It appears that rules of origin are primarily used to limit trade, and hence represent an instrument for trade protection.
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Rules of origin exist to avoid trade deflection, but they distort global value chains and are costly to abide by.
This column shows empirically that in preferential trade agreements, trade deflection is unlikely to be profitable because tariffs are generally low, that countries in a common free trade agreement tend to have similar external tariff levels, and that when tariff levels differ, deflection is profitable at most for one country in the pair. Moreover, transportation costs create a natural counterforce.
It appears that rules of origin are primarily used to limit trade, and hence represent an instrument for trade protection.
Continue reading
Friday, 5 July 2019
The protectionist instinct: How labour market shocks shape the demand for trade protection
a column by Rafael Di Tella and Dani Rodrik for VOX: CEPR’s Policy Portal
Economists have traditionally emphasised the benefits of openness to trade, but populists resist it. How generalised is the demand for trade protection? And how does it compare with other disruptions in the labour market?
This column suggests that people often react by demanding trade protection when faced with shocks that generate unemployment, with the largest effects observed when it is caused by imports arriving from a poor country.
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Economists have traditionally emphasised the benefits of openness to trade, but populists resist it. How generalised is the demand for trade protection? And how does it compare with other disruptions in the labour market?
This column suggests that people often react by demanding trade protection when faced with shocks that generate unemployment, with the largest effects observed when it is caused by imports arriving from a poor country.
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Friday, 12 April 2019
What is kidnap insurance?
a post by Anja Shortland for the OUP blog
‘Coins Currency’ by Stevepb. Public domain via Pixabay
Millions of people live and work in areas where they cannot rely on the state to keep them safe. Instead, their security is provided by armed groups: for example, community or clan militias, warlords, rebel movements, drug cartels, or mafias – i.e. local strongmen that can defend their territory against intruders and keep order within it. But their deal with the population usually goes far beyond providing physical security. When armed groups protect property rights, facilitate trade, and offer fair dispute resolution, the local economy grows and with it the protectors’ tax base. As long as the interactions are long-term, the strongmen gain legitimacy and profit from developing a reputation for effective protection, good governance and non-punitive taxation.
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‘Coins Currency’ by Stevepb. Public domain via Pixabay
Millions of people live and work in areas where they cannot rely on the state to keep them safe. Instead, their security is provided by armed groups: for example, community or clan militias, warlords, rebel movements, drug cartels, or mafias – i.e. local strongmen that can defend their territory against intruders and keep order within it. But their deal with the population usually goes far beyond providing physical security. When armed groups protect property rights, facilitate trade, and offer fair dispute resolution, the local economy grows and with it the protectors’ tax base. As long as the interactions are long-term, the strongmen gain legitimacy and profit from developing a reputation for effective protection, good governance and non-punitive taxation.
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Thursday, 18 October 2018
Innovation and production in the global economy: The consequences of recent shocks
a column by Costas Arkolakis, Natalia Ramondo, Andres RodrÃguez-Clare and Stephen Yeaple for VIX: CEPR’s Policy Portal
One consequence of the last decades of globalisation is that, thanks to multinational firms, goods are increasingly being produced far from where ideas are created.
Using general equilibrium modelling, this column analyses the welfare and distributional effects of the recent wave of protectionism. Central to the results is the flexibility that multinational firms have in locating their innovation and production activities around the globe.
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One consequence of the last decades of globalisation is that, thanks to multinational firms, goods are increasingly being produced far from where ideas are created.
Using general equilibrium modelling, this column analyses the welfare and distributional effects of the recent wave of protectionism. Central to the results is the flexibility that multinational firms have in locating their innovation and production activities around the globe.
Continue reading
Tuesday, 28 August 2018
Protectionism and the business cycle
a column by Alessandro Barattieri, Matteo Cacciatore and Fabio Ghironi for VOX: CEPR’s Policy Portal
Populist politicians argue that protectionism stimulates the domestic economy. This column uses data on temporary trade barriers from antidumping investigations to show that when small open economies have imposed protectionist measures, it has caused inflation to rise and real economic activity to fall. Empirical analysis and model-based exercises show that protectionism is costly even when used temporarily, even for economies stuck in liquidity traps, and regardless of the flexibility of the exchange rate.
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Populist politicians argue that protectionism stimulates the domestic economy. This column uses data on temporary trade barriers from antidumping investigations to show that when small open economies have imposed protectionist measures, it has caused inflation to rise and real economic activity to fall. Empirical analysis and model-based exercises show that protectionism is costly even when used temporarily, even for economies stuck in liquidity traps, and regardless of the flexibility of the exchange rate.
Continue reading
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