Would protectionism defuse global imbalances and spur economic activity?: a scenario analysis

Hamid Faruqee, Douglas Laxton, Dirk Muir and Paolo Pesenti

No 268, Staff Reports from Federal Reserve Bank of New York

Abstract: In the evolving analysis of global imbalances, the possibility that countries will resort to increased protectionism is often mentioned but rarely analyzed. This paper attempts to fill that gap, examining the macroeconomic implications of a shift to protectionist policies through the lens of a dynamic general equilibrium model of the world economy that encompasses four regional blocs. Simulation exercises are carried out to assess the consequences of imposing uniform and discriminatory tariffs on trading partners as well as the consequences of tariff retaliation. We also discuss a scenario in which a ?globalization backlash? lowers the degree of competition in import-competing sectors, and compare the implications of higher markups in the product and labor markets.

Keywords: current account deficit; net asset positions; multicountry dynamic general equilibrium models; trade policy (search for similar items in EconPapers)
JEL-codes: E66 F32 F47 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2006
New Economics Papers: this item is included in nep-int
Note: For a published version of this report, see Hamid Faruqee, Douglas Laxton, Dirk Muir, and Paolo Pesenti, "Would Protectionism Defuse Global Imbalances and Spur Economic Activity? A Scenario Analysis," Journal of Economic Dynamics and Control 32, no. 8 (August 2008): 2651-89.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr268.html (text/html)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr268.pdf (application/pdf)

Related works:
Journal Article: Would protectionism defuse global imbalances and spur economic activity? A scenario analysis (2008)
Working Paper: Would Protectionism Defuse Global Imbalances and Spur Economic Activity? A Scenario Analysis (2006)
Working Paper: Would Protectionism Defuse Global Imbalances and Spur Economic Activity? A Scenario Analysis (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:268

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().