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

Hamid Faruqee (), Douglas Laxton, Dirk Muir () and Paolo A. 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: Tariff; Imports; International trade; Competition (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2006
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Related works:
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)
Journal Article: Would protectionism defuse global imbalances and spur economic activity? A scenario analysis (2008)
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