International Economics

<< N°165

  N°165  
Issue Q1 2021  
Protectionism and international trade: A long-run view  
Tullio Gregori
 
This paper investigates the long-run relationship between international trade and protectionism, which is measured by a sub-component of the KOF globalization index using a standard import model with a heterogeneous balanced panel of 34 countries from 1970 to 2017. The model is tested using GDP and the Import Intensity-Adjusted Demand (IAD) as an activity variable for a performance comparison. Both specifications are estimated using recent advances in the panel autoregressive distributed lag model literature with cross-sectional dependence. The cross-sectional autoregressive distributed lag (CS-ARDL) and the cross-sectional distributed lag (CS-DL) models provide similar results. Mean group estimates show a proportional impact of IAD on international trade whilst the GDP effect is larger. The long-run protectionism elasticity is always negative and significant but less than half of the import price elasticity.
Abstract

   
Trade ; Protectionism ; Long-run elasticities ; Panel distributed lags ; Keywords
F13 ; F14 ; F41 ; F69 ; JEL classification
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