Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171126
Authors: 
Zissimos, Benjamin
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6662
Abstract: 
This paper develops a new model of trade policy under dictatorship and democratization. The paper makes two contributions. One is to provide a deeper understanding of the relationship between political institutions and economic efficiency by studying the endogenous interaction between the form of government and trade policy. The paper’s second contribution is to show how a dictatorship can manipulate trade policy to maintain its grip on power in the face of permanent world price shocks, thus opening the door to a re-examination of trade policy re- sponses to technology shocks. The model is used to explain an interesting episode of trade policymaking between 1815 and 1846, during which time Britain substantially liberalized trade while Prussia, on the other side of the grain market, significantly increased protectionism.
Subjects: 
commitment problem
efficiency
fiscal capacity
institutions
trade policy
JEL: 
D30
D74
F11
F13
P16
Document Type: 
Working Paper

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