Unequal gains, prolonged pain: A model of protectionist overshooting and escalation

• 成果类型: Article
• 署名作者: Blanchard, Emily; Willmann, Gerald
• 署名单位: Dartmouth College; Center for Economic & Policy Research (CEPR); University of Bielefeld; Leibniz Association; Institut fur Weltwirtschaft an der Universitat Kiel (IFW)
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2021.103559
• 发表日期: 2022
• 关键词: Populism; Protectionism; overshooting; Dynamic political economy; human capital; education; overlapping generations; Endogenous tariffs

摘要

We develop a model of democratic responses to macroeconomic shocks, and show that when economic adjustment is slower than potential political change, economic shocks can trigger populist surges. Applied to trade policy, we show that unexpected changes in world prices or skill biased technological change can induce a surge in economic nationalism and trade protection. Over time, the initial protectionist surge will gradually diminish if and only if educational gains enable less-skilled workers to catch up with the overall economy. The more unequal the initial distribution of the returns to human capital, the greater and longer-lasting the protectionist backlash will be: unequal gains, prolonged pain. Key data markers suggested by the model exhibit patterns consistent with recent surges in protectionism in the US and UK.(c) 2021 Elsevier B.V. All rights reserved.