a column by Mario Larch, José-Antonio Monteiro, Roberta Piermartini and Yoto Yotov for VOX: CEPR’s Policy Portal
Though economic theory clearly makes the case for WTO trade rules, the empirical evidence of their effect is mixed.
This column argues that previous studies may have underestimated the positive role of GATT/WTO membership by not taking into account the non-discriminatory nature of their agreements. Besides market access, the agreements provide greater transparency and predictability that benefit WTO members and non-members alike.
Taking these effects into account suggests that, on average, GATT/WTO membership has increased trade between Members by 171% and trade between member and non-member countries by about 88%.
Continue reading for a clear exposition of how the WTO works
Showing posts with label tariffs. Show all posts
Showing posts with label tariffs. Show all posts
Tuesday, 26 November 2019
Wednesday, 13 November 2019
Early 20th century American exceptionalism: Production, trade and diffusion of the automobile
a column by Dong Cheng, Mario Crucini, Hyunseung Oh and Hakan Yilmazkuday for VOX: CEPR’s Policy Portal
As the current narrative goes, the loss of US manufacturing jobs is due to competition from China and one way to get the jobs back is by running tariffs up the proverbial flagpole.
This column argues that in the case of the automobile industry, history shows exactly the opposite occurred.
In the early 20th century, the US achieved exceptionalism in innovation, production and trade in automobiles without domestic tariff protection, while foreign nations languished behind high tariff walls designed to protect their fledgling domestic automobile industries.
Continue reading but be careful, a couple of the graphs have what I consider somewhat weird axises.
As the current narrative goes, the loss of US manufacturing jobs is due to competition from China and one way to get the jobs back is by running tariffs up the proverbial flagpole.
This column argues that in the case of the automobile industry, history shows exactly the opposite occurred.
In the early 20th century, the US achieved exceptionalism in innovation, production and trade in automobiles without domestic tariff protection, while foreign nations languished behind high tariff walls designed to protect their fledgling domestic automobile industries.
Continue reading but be careful, a couple of the graphs have what I consider somewhat weird axises.
Friday, 25 October 2019
Tariffs and monetary policy: A toxic mix
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.
Continue reading
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.
Continue reading
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.
Continue reading
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
Friday, 10 May 2019
The effects of trade policy might be more diverse than most economists think
a column by Peter Egger and Katharina Erhardt for VOX: CEPR’s Policy Portal
When economists model changes in tariffs, their models make assumptions about the impact of those changes.
The column argues that those assumptions are often contradicted in the real world and proposes an approach that relaxes these restrictions. Estimates using this approach show that customary models may severely underestimate the impact of recent tariff increases.
Continue reading
I think I am beginning to understand about the effects of tariff changes. The thing I really like about these VOX posts is that the language is within my grasp.
When economists model changes in tariffs, their models make assumptions about the impact of those changes.
The column argues that those assumptions are often contradicted in the real world and proposes an approach that relaxes these restrictions. Estimates using this approach show that customary models may severely underestimate the impact of recent tariff increases.
Continue reading
I think I am beginning to understand about the effects of tariff changes. The thing I really like about these VOX posts is that the language is within my grasp.
Monday, 6 May 2019
The global macroeconomics of a trade war: Findings from the EAGLE model
a column by Wilko Bolt, Kostas Mavromatis and Sweder Van Wijnbergen for VOX: CEPR’s Policy Portal
Increasing protectionism will slow down world trade and may dampen global economic growth.
This column examines the global macroeconomic consequences of a major trade conflict between the US and China, and shows that the two countries would be the biggest losers from a 10% ‘tit-for-tat’ trade war between them. As long as it does not get involved in the conflict, the euro area may temporally gain from trade diversion, as competitiveness improves and imports from regions whose exports are blocked elsewhere become cheaper.
Continue reading
Increasing protectionism will slow down world trade and may dampen global economic growth.
This column examines the global macroeconomic consequences of a major trade conflict between the US and China, and shows that the two countries would be the biggest losers from a 10% ‘tit-for-tat’ trade war between them. As long as it does not get involved in the conflict, the euro area may temporally gain from trade diversion, as competitiveness improves and imports from regions whose exports are blocked elsewhere become cheaper.
Continue reading
Friday, 3 May 2019
Tariffs and politics: Evidence from Trump’s trade wars
a column by Thiemo Fetzer and Carlo Schwarz for VOX: CEPR’s Policy Portal
Tariff retaliation is widely believed to be politically motivated.
This column presents evidence that retaliation against the Trump administration's tariff hikes seems to be systematically targeted against the Republican voter base. China appears to have been able to achieve a high degree of political targeting but likely harmed its own economy by targeting agricultural goods for which the US is a major supplier.
The EU, on the other hand, appears to be more successful in navigating the trade-off. It also finds some evidence suggesting that Republican candidates fared worse in the mid-term elections in the US counties most exposed to retaliation.
Continue reading
Tariff retaliation is widely believed to be politically motivated.
This column presents evidence that retaliation against the Trump administration's tariff hikes seems to be systematically targeted against the Republican voter base. China appears to have been able to achieve a high degree of political targeting but likely harmed its own economy by targeting agricultural goods for which the US is a major supplier.
The EU, on the other hand, appears to be more successful in navigating the trade-off. It also finds some evidence suggesting that Republican candidates fared worse in the mid-term elections in the US counties most exposed to retaliation.
Continue reading
Monday, 29 April 2019
The Empire Marketing Board, 1926-33: Britain’s failed attempt at soft trade policy
a column by David M. Higgins and Brian Varian for VOX: CEPR’s Policy Portal
In the late 1920s and early 1930s, Britain tried to reorient its trade towards the Empire via an advertising campaign led by the Empire Marketing Board.
As this column shows, in economic terms, the initiative was a complete failure, producing no increase in the Empire’s share of Britain’s imports.
Imperial sentiment conflicted with economic reality: Britain was the biggest global importer of produce from the late 19th century to the interwar period, and the EMB’s activities were constrained by entrenched consumer preferences for non-Empire foodstuffs, such as Argentine beef and Danish butter.
Continue reading
In the late 1920s and early 1930s, Britain tried to reorient its trade towards the Empire via an advertising campaign led by the Empire Marketing Board.
As this column shows, in economic terms, the initiative was a complete failure, producing no increase in the Empire’s share of Britain’s imports.
Imperial sentiment conflicted with economic reality: Britain was the biggest global importer of produce from the late 19th century to the interwar period, and the EMB’s activities were constrained by entrenched consumer preferences for non-Empire foodstuffs, such as Argentine beef and Danish butter.
Continue reading
Tuesday, 23 April 2019
How Britain unified Germany: Endogenous trade costs and the formation of a customs union
a column by Thilo Huning and Nikolaus Wolf for VOX: CEPR’s Policy Portal
State borders can change due to both political and economic disputes.
This column shows how the formation of the German state can be traced back to British political intervention at the end of the Napoleonic War. In preventing Russia from gaining territory westwards, Britain set in motion a series of events that gave Prussia strategic trade advantages. This led to the formation of Europe's first customs union (the Zollverein) and prepared the political unification of Germany.
Continue reading
State borders can change due to both political and economic disputes.
This column shows how the formation of the German state can be traced back to British political intervention at the end of the Napoleonic War. In preventing Russia from gaining territory westwards, Britain set in motion a series of events that gave Prussia strategic trade advantages. This led to the formation of Europe's first customs union (the Zollverein) and prepared the political unification of Germany.
Continue reading
Tuesday, 19 March 2019
What's wrong with the WTO's Environmental Goods Agreement
a column by Jaime de Melo and Jean-Marc Solleder for VOX: CEPR’s Policy Portal
Developing countries have not participated in the WTO-led negotiations aimed at bringing down barriers to trade in environmental goods. If negotiations conclude, would the win for trade and for the environment be extended to a win for developing countries?
This column draws insights from a newly assembled comprehensive dataset on barriers to trade in environmental goods and provides evidence that tariffs and non-tariff barriers are still an impediment to trade while similar regulations stimulate it. A larger list of environmental goods would entice developing-country participation, but this will also require protecting developing countries from challenges at the WTO.
Continue reading
Developing countries have not participated in the WTO-led negotiations aimed at bringing down barriers to trade in environmental goods. If negotiations conclude, would the win for trade and for the environment be extended to a win for developing countries?
This column draws insights from a newly assembled comprehensive dataset on barriers to trade in environmental goods and provides evidence that tariffs and non-tariff barriers are still an impediment to trade while similar regulations stimulate it. A larger list of environmental goods would entice developing-country participation, but this will also require protecting developing countries from challenges at the WTO.
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.
Continue reading
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
Tuesday, 26 June 2018
What imperial preference can teach us about post-Brexit trade deals
a column by Brian Varian for VOX: CEPR’s Policy Portal
Brexit has sparked interest in trade agreements between Britain and the Commonwealth. This has a precedent in the Edwardian era, when the Dominions adopted policies of imperial preference toward imports from Britain. This column argues that New Zealand’s policy of imperial preference, enacted in 1903, was ineffective in diverting trade toward Britain, suggesting that trade policies within the British Empire or Commonwealth do not always achieve what they intend.
Continue reading
Brexit has sparked interest in trade agreements between Britain and the Commonwealth. This has a precedent in the Edwardian era, when the Dominions adopted policies of imperial preference toward imports from Britain. This column argues that New Zealand’s policy of imperial preference, enacted in 1903, was ineffective in diverting trade toward Britain, suggesting that trade policies within the British Empire or Commonwealth do not always achieve what they intend.
Continue reading
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