Escaping a protectionist rut: Policy mechanisms for trade reform in a democracy

• 成果类型: Article
• 署名作者: Blanchard, Emily; Willmann, Gerald
• 署名单位: Dartmouth College; Universite Catholique Louvain
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2011.05.004
• 发表日期: 2011
• 页码: 72-85
• 关键词: Dynamic political economy; Trade policy; skill acquisition; Politically stable policy paths; Referenda

摘要

This paper analyzes the dynamics of trade policy reform under democracy. In an overlapping generations model, heterogeneous agents may acquire skills when young thereby determining the skill composition of their cohort. Current and anticipated trade policies influence education decisions and thus voters' trade policy preferences. We show that there may exist two political steady states: one protectionist and one liberal. Transition from the former to the latter can be achieved by government announcements, temporary educational subsidies, or tariff liberalization by trading partners, but generally not by transfer payments to adversely affected workers. We find additionally that reform is politically feasible only if the proposed liberalization is sufficiently large, suggesting that radical reform may be necessary for escaping a protectionist political rut. (C) 2011 Elsevier B.V. All rights reserved.