Import Protection, Business Cycles, and Exchange Rates : Evidence from the Great Recession

This research estimates the impact of macroeconomic fluctuations on import protection policies over 1988:Q1-2010:Q4 for the United States, European Union, and three other industrialized economies. First, estimates on a pre-Great Recession sample provide evidence of three key relationships for the US and EU. Increases in domestic unemployment rates and real appreciations in bilateral exchange rates led to substantial increases in antidumping and related forms of import protection. Furthermore, economies historically imposed these bilateral import restrictions on trading partners going through their own periods of weak economic growth. Second, estimates from the pre-Great Recession model predict a major trade policy response during 2008:Q4-2010:Q4, given the realized macroeconomic shocks. New US and EU trade barriers were projected to cover up to an additional 15 percentage points of nonoil imports, well above the baseline level of 2-3 percent of import coverage immediately preceding the crisis. Third, re-estimating the model on data from the Great Recession period illustrates why the realized trade policy response differed from model predictions based on historical data. While exchange rate movements played an important role in limiting new import protection, the US and EU also "switched" from their historical behavior during the Great Recession and shifted new import protection toward trading partners experiencing economic growth and away from those that were contracting.

Bibliographic Details

Main Authors:	Bown, Chad P., Crowley, Meredith A.
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	World Bank, Washington, DC 2012-04
Subjects:	AGREEMENT ON SAFEGUARDS, ANNUAL IMPORTS, ANTIDUMPING, ANTIDUMPING CASES, ANTIDUMPING DUTIES, ANTIDUMPING FILINGS, ANTIDUMPING POLICY, BILATERAL EXCHANGE RATE, BILATERAL EXCHANGE RATES, BILATERAL IMPORTS, BILATERAL RELATIONSHIPS, BILATERAL TRADE, BUSINESS CYCLE, BUSINESS CYCLES, CAPACITY CONSTRAINTS, CHANGES IN TRADE, CLARITY, COUNTERVAILING DUTIES, COUNTERVAILING DUTY INVESTIGATION, CUMULATIVE EFFECT, CURRENCY, CURRENCY APPRECIATIONS, CURRENCY DEPRECIATIONS, DEMAND SHOCKS, DEPENDENT VARIABLE, DEPENDENT VARIABLES, DEPRESSION, DEVELOPING COUNTRIES, DEVELOPMENT POLICY, DISPUTE SETTLEMENT, DOMESTIC CURRENCY, DOMESTIC CURRENCY PRICE, DOMESTIC ECONOMY, DOMESTIC INDUSTRY, DOMESTIC MARKET, DOMESTIC UNEMPLOYMENT, DUMMY VARIABLES, ECONOMETRIC MODELS, ECONOMIC CONTRACTION, ECONOMIC GROWTH, ECONOMIC RESEARCH, EUROPEAN UNION, EXCHANGE RATE, EXCHANGE RATE APPRECIATION, EXCHANGE RATE APPRECIATIONS, EXCHANGE RATE DATA, EXCHANGE RATE FLUCTUATIONS, EXCHANGE RATE INCREASE, EXCHANGE RATE MOVEMENT, EXCHANGE RATE MOVEMENTS, EXCHANGE RATE SHOCK, EXCHANGE RATES, EXPLANATORY VARIABLE, EXPLANATORY VARIABLES, EXPORT RESTRICTIONS, EXPORTERS, EXPORTS, EXTERNALITIES, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL CRISIS, FIXED EFFECTS, FOREIGN COUNTRY, FOREIGN FIRM, FOREIGN FIRMS, FOREIGN SOURCES, FORMAL ANALYSIS, GENERAL AGREEMENT ON TARIFFS, GLOBAL TRADE, GROWTH RATE, IMPERFECT COMPETITION, IMPORT, IMPORT DATA, IMPORT GROWTH, IMPORT POLICY, IMPORT PRICE, IMPORT PRODUCT, IMPORT PROTECTION, IMPORT RESTRICTION, IMPORT RESTRICTIONS, IMPORT TARIFFS, IMPORT VALUE, IMPORTED PRODUCTS, IMPORTING COUNTRY, IMPORTS, INDUSTRIALIZED COUNTRIES, INDUSTRY TRADE, INTERNATIONAL BANK, INTERNATIONAL BUSINESS, INTERNATIONAL ECONOMICS, INTERNATIONAL TRADE, INTERNATIONAL TRADE RULES, INTERNATIONAL TRADING, ITC, LEGAL CONDITION, LEVELS OF IMPORT, LOCAL CURRENCY, LOW TARIFFS, MACROECONOMIC CONDITIONS, MACROECONOMIC FACTORS, MACROECONOMIC FLUCTUATIONS, MACROECONOMIC INDICATORS, MACROECONOMIC SHOCK, MACROECONOMIC SHOCKS, MANAGED TRADE, MARGINAL COST, MARKET ECONOMY, MULTILATERAL NEGOTIATIONS, MULTINATIONAL FIRMS, NATIONAL AUTHORITY, NATIONAL CURRENCY, NON-MARKET ECONOMY, OIL IMPORTS, PATENTS, POLICY RESEARCH, PRICE INDEX, PRICE INDICES, PROTECTIONISM, PROTECTIONIST, RATE OF GROWTH, REAL APPRECIATION, REAL APPRECIATIONS, REAL DEPRECIATIONS, REAL EXCHANGE RATE, REAL EXCHANGE RATES, REAL GDP, RECESSION, RECESSIONS, RECIPROCAL DUMPING, ROBUSTNESS CHECK, ROBUSTNESS CHECKS, STANDARD DEVIATION, STANDARD DEVIATIONS, TARIFF INCREASES, TARIFF PROTECTION, TARIFF-RATE QUOTA, TERMS OF TRADE, TERMS-OF-TRADE GAINS, TRADE AGREEMENTS, TRADE ALERT, TRADE BARRIER, TRADE BARRIERS, TRADE FLOWS, TRADE GROWTH, TRADE IN GOODS, TRADE MODELS, TRADE POLICIES, TRADE POLICY, TRADE POLICY INSTRUMENTS, TRADE PROTECTION, TRADE RESTRICTIONS, TRADE RESTRICTIVENESS, TRADE RULES, TRADE VALUES, TRADE VOLUME, TRADING PARTNER, TRADING PARTNERS, UNCERTAINTY, UNEMPLOYMENT RATE, UNEMPLOYMENT RATES, VALUE OF IMPORTS, VERTICAL SPECIALIZATION, WORLD ECONOMY, WORLD TRADE, WORLD TRADE ORGANIZATION, WORLD TRADING SYSTEM, WTO,
Online Access:	http://documents.worldbank.org/curated/en/2012/04/16227391/import-protection-business-cycles-exchange-rates-evidence-great-recession-vol-1-pf-1 http://hdl.handle.net/10986/6040
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