Self-Enforcing Trade Agreements: Evidence from Time-Varying Trade Policy
Chad P. Bown, Meredith A. Crowley
American Economic Review · 2013 · Volume 103 · Issue 2
Abstract
The Bagwell and Staiger (1990) theory of cooperative trade agreements predicts new tariffs (i) increase with imports, (ii) increase with the inverse of the sum of the import demand and export supply elasticities, and (iii) decrease with the variance of imports. We find US import policy during 1997-2006 to be consistent with this theory. A one standard deviation increase in import growth, the inverse of the sum of the import demand and export supply elasticity, and the standard deviation of import growth changes the probability that the US imposes an antidumping tariff by 35 percent, by 88 percent, and by -76 percent, respectively.
Keywords
Models of Trade with Imperfect Competition and Scale Economies, Trade Policy, International Trade Organizations, Empirical Studies of Trade
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