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Protectionism and Economic Growth: Causal Evidence from the First Era of Globalization

Niklas Potrafke (), Fabian Ruthardt, Kaspar Wüthrich () and Fabian Ruthardt ()
Authors registered in the RePEc Author Service: Fabian Ruthardt ()

No 8759, CESifo Working Paper Series from CESifo

Abstract: We investigate how protectionist policies influence short-run 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.

Keywords: protectionism; economic growth; first era of globalization; synthetic control method; causal inference (search for similar items in EconPapers)
JEL-codes: C33 D72 F10 F13 N10 O11 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-gro, nep-his, nep-int and nep-mac
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