Endogenous Trade Protection under Regional TradeAgreements

Endogenous tariff formation has been the subject oftheoretical studies that attempt to determine thefundamental economic variables that influence thestructure of industry protection implemented byinternational trade policy makers. An empiricalanalysis of endogenous tariff formation under theframework of a regional trade agreement implementedby the Andean Community Group is offered in thisbook. Econometric models for the group's commonexternal tariff (CET) and for individual countrytariff deviations with respect to the CET areestimated. The causal links among the variables areobtained by using the directed acyclical graphs (DAG)approach, which allows for a refined search forcausal relationships. The approach is particularlyappealing for the analysis of endogenous tradeprotection since it allows analyzing economic systemsthat involve policy intervention. The empiricalanalysis supports classic theoretical models on tradeprotection, such as the equity concern model, theinterest group and the adding machine model. However,a rather interesting result derived from the DAGanalysis is the feedback interaction that seems tooperate between tariffs and policy variables.

Autorentext

Gustavo A. Sánchez, Ph.d. in Agricultural Economics at Texas A&M University, USA. M.Sc. in Economics-Econometrics at Southamptom University, UK. Senior Statistician at StataCorp

Klappentext
Endogenous tariff formation has been the subject of theoretical studies that attempt to determine the fundamental economic variables that influence the structure of industry protection implemented by international trade policy makers. An empirical analysis of endogenous tariff formation under the framework of a regional trade agreement implemented by the Andean Community Group is offered in this book. Econometric models for the group's common external tariff (CET) and for individual country tariff deviations with respect to the CET are estimated. The causal links among the variables are obtained by using the directed acyclical graphs (DAG) approach, which allows for a refined search for causal relationships. The approach is particularly appealing for the analysis of endogenous trade protection since it allows analyzing economic systems that involve policy intervention. The empirical analysis supports classic theoretical models on trade protection, such as the equity concern model, the interest group and the adding machine model. However, a rather interesting result derived from the DAG analysis is the feedback interaction that seems to operate between tariffs and policy variables.