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Title:Is there a short-run case for protectionism? Trade policy and the business cycle PDF Logo
Authors:Larch, Mario
Lechthaler, Wolfgang
Issue Date:2011
Series/Report no.:Kiel Working Papers 1717
Abstract:Recently, the world economy has seen its greatest down turn since World War II. Although not as bad as during the Great Depression, there was still a worrisome increase in protectionist measures, in an attempt to mitigate the economic downturn. Protectionism can have many different faces. It can come in the form of Buy-American clauses of stimulus packages, as an increase in trade barriers or tariffs, or as an increase in export subsidies. In this paper, we show that none of these measures constitutes an effective response to economic downturns. Although Buy-American clauses and export subsidies stimulate output in the short run, they are less effective than general government spending impulses. Raising tariffs or trade barriers even decreases output.
Subjects:Business cycle policy
Protectionism
Buy-American
Tariffs
Export subsidies
JEL:E13
E60
F11
F12
F13
Document Type:Working Paper
Appears in Collections:Kieler Arbeitspapiere, IfW
Publikationen von Forscherinnen und Forschern des IfW

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