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Protectionism and economic growth: Causal evidence from the first era of globalization

Niklas Potrafke, Fabian Ruthardt and Kaspar W\"uthrich

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Abstract: We investigate how protectionist policies influence economic growth. Our empirical strategy exploits an extraordinary tax scandal that gave rise to an unexpected change of government in Sweden. A free-trade majority in parliament was overturned by a protectionist majority in 1887. The protectionist government increased tariffs. We employ the synthetic control method to select control countries against which economic growth in Sweden can be compared. We do not find evidence suggesting that protectionist policies influenced economic growth and examine channels why. The new tariff laws increased government revenue. However, the results do not suggest that the protectionist government stimulated the economy by increasing government expenditure.

Date: 2020-10, Revised 2022-03
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Working Paper: Protectionism and economic growth: Causal evidence from the first era of globalization (2021) Downloads
Working Paper: Protectionism and Economic Growth: Causal Evidence from the First Era of Globalization (2020) Downloads
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