Protectionism and international trade: A long-run view

Tullio Gregori

International Economics, 2021, issue 165, 1-13

Abstract: 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.

Keywords: Trade; Protectionism; Long-run elasticities; Panel distributed lags (search for similar items in EconPapers)
JEL-codes: F13 F14 F41 F69 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepiie:2021-q1-165-2

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