Emerging Economies, Trade Policy, and Macroeconomic Shocks

41 Pages Posted: 18 Dec 2012 Last revised: 8 May 2014

See all articles by Chad P. Bown

Chad P. Bown

Peterson Institute for International Economics; Centre for Economic Policy Research (CEPR)

Meredith Crowley

University of Cambridge - Faculty of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2014

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.

Keywords: antidumping, safeguards, temporary trade barriers, emerging economies, tariffs, WTO, business cycles, exchange rates

JEL Classification: F13

Suggested Citation

Bown, Chad P. and Crowley, Meredith, Emerging Economies, Trade Policy, and Macroeconomic Shocks (March 1, 2014). FRB of Chicago Working Paper No. 2012-18, Available at SSRN: https://ssrn.com/abstract=2190545 or http://dx.doi.org/10.2139/ssrn.2190545

Chad P. Bown

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Meredith Crowley (Contact Author)

University of Cambridge - Faculty of Economics ( email )

Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom

HOME PAGE: http://https://meredithcrowley.weebly.com/

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