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Emerging economies, trade policy, and macroeconomic shocks


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Type

Article

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Authors

Bown, CP 
Crowley, MA 

Abstract

This paper estimates the impact of aggregate fluctuations on the time-varying trade policies of thirteen major emerging economies over 1989-2010; by 2010, these WTO member countries collectively accounted for 21 percent of world merchandise imports and 22 percent of world GDP. We examine determinants of carefully constructed, bilateral measures of new import restrictions on products arising through the temporary trade barrier (TTB) policies of antidumping, safeguards, and countervailing duties. We find evidence of a counter-cyclical relationship between macroeconomic shocks and new TTB import restrictions as well as an important role for fluctuations in bilateral real exchange rates. Furthermore, the trade policy responsiveness coinciding with WTO establishment in 1995 suggests a significant change relative to the pre-WTO period; i.e., new import restrictions became more counter-cyclical and sensitive to real exchange rate shocks over time. Finally, we also present results that explicitly address changes to the institutional environment facing these emerging economies as they joined the WTO and adopted disciplines to restrain their application of other trade policies such as applied import tariffs.

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Keywords

Antidumping, Business cycles, Emerging economies, Exchange rates, Safeguards, Tariffs, Temporary trade barriers, WTO

Journal Title

Journal of Development Economics

Conference Name

Journal ISSN

0304-3878
1872-6089

Volume Title

Publisher

Elsevier BV