The Effects of Antidumping Duties in a New Open Economy Macroeconomics Model

Chung-Fu Lai and Xi-Tsz Lee
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Chung-Fu Lai: Department of Applied Economics, Fo Guang University, Yilan County, Taiwan
Xi-Tsz Lee: Department of Applied Economics, Fo Guang University, Yilan County, Taiwan.

International Journal of Economics and Financial Issues, 2016, vol. 6, issue 3, 837-844

Abstract: This paper presents New Open Economy Macroeconomics as the analytical framework in attempt to integrate the characteristics of imperfect competition market and antidumping behavior into a two-country (home country and foreign country) model with micro-foundation. We analyze the long-term effect of implementing antidumping duty in home country on various microeconomic variables (i.e. consumption, output, price, exchange rate, and terms of trade [TOT]) when foreign country engage in dumping behaviors toward the home country. Theoretical inference and simulation analysis of this paper suggests a positive correlation between antidumping duty and domestic consumption, foreign consumption, world consumption, domestic price index, foreign price index, and exchange rate; whereas a negative correlation between antidumping duty and the domestic output, foreign output, and TOT. Moreover, the level of volatility in all macroeconomic variables rises when the ratio of export product price selling below its retail price in home country expands.

Keywords: Antidumping Duties; Micro-foundation; New Open Economy Macroeconomics (search for similar items in EconPapers)
JEL-codes: F12 F13 F41 (search for similar items in EconPapers)
Date: 2016
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