Protection for Sale in the EU
32 Pages Posted: 13 Mar 2007
Date Written: March 6, 2007
This paper presents estimation of the Grossman-Helpman (1994) model for the EU. We try to address a number of pitfalls that surround the previous empirical literature. First, we suggest a new identification strategy that enables to single out politically organized sectors with specific regard to trade policy. Second, we utilize two alternative measures of trade protection (ad-valorem equivalent of non-tariff barriers and overall restrictiveness) and adopt industrial and trade data at a high level of disaggregation. Finally, we directly obtain the structural coefficients of the model by estimating a nonlinear simultaneous equations system that is tightly linked to theory. We find that the theoretical model is broadly consistent with data and conclusions turn out internally coherent.
Keywords: Trade policy; European Union; Lobbying; Political economy; Simultaneous Equations Models
JEL Classification: F13; F15; D71; D72; C31
Suggested Citation: Suggested Citation