Can free trade agreements help solidify emerging democracies?

[Research Highlight]

February 19, 2016

Why would-be autocrats don't like free trade pacts

Does export manufacturing undercut education in industrializing countries?

[Research Highlight]

August 22, 2016

How the spread of trade-oriented manufacturing in Mexico affected dropout rates

Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms

By Paula Bustos

American Economic Review, February 2011

This paper studies the impact of a regional free trade agreement, MERCOSUR, on technology upgrading by Argentinean firms. To guide empirical work, I introduce technology choice in a model of trade with heterogeneous firms. The joint treatment of the techn...

Wage Shocks and North American Labor-Market Integration

By Raymond Robertson

American Economic Review, September 2000

This study uses household-level data from the United States and Mexico to examine labor-market integration. I consider how the effects of shocks and rates of convergence to an equilibrium differential are affected by borders, geography, and demographics. ...

Trade Liberalization and Markup Dispersion: Evidence from China's WTO Accession

By Yi Lu and Linhui Yu

American Economic Journal: Applied Economics, October 2015

In this paper, we empirically investigate whether trade liberalization affects markup dispersion, a potential source of resource misallocation. The identification uses China's WTO accession at the end of 2001. We show that trade liberalization reduces mar...

Pareto-Efficient International Taxation

By Michael Keen and David Wildasin

American Economic Review, March 2004

This paper analyzes Pareto-efficient international tax regimes. Because every country faces its own national budget constraint, the Diamond-Mirrlees production-efficiency theorem, which underlies key tenets of policy advice in international taxation - the...

Trade Policy and Loss Aversion

By Caroline Freund and Caglar Ozden

American Economic Review, September 2008

We develop a political economy model where loss aversion and reference dependence are important in shaping people’s preferences over trade policy. The policy implications of the augmented model differ in three ways: there is a region of compensating pro...

Economic Integration and Political Disintegration

By Alberto Alesina, Enrico Spolaore, and Romain Wacziarg

American Economic Review, December 2000

In a world of trade restrictions, large countries enjoy economic benefits, because political boundaries determine the size of the market. Under free trade and global markets even relatively small cultural, linguistic or ethnic groups can benefit from form...

Free Trade Agreements and the Consolidation of Democracy

By Xuepeng Liu and Emanuel Ornelas

American Economic Journal: Macroeconomics, April 2014

We study the relationship between participation in free trade agreements (FTAs) and the sustainability of democracy. Our model shows that FTAs can critically reduce the incentive of authoritarian groups to seek power by destroying protectionist rents, ...

Is Free Trade Good for the Environment?

By Werner Antweiler, Brian R. Copeland, and M. Scott Taylor

American Economic Review, September 2001

This paper investigates how openness to international goods markets affects pollution concentrations. We develop a theoretical model to divide trade's impact on pollution into scale, technique, and composition effects and then examine this theory using da...

The Case for Trade Liberalization in Developing Countries

[Symposium: Trade Liberalization and Development]

By Rudiger Dornbusch

Journal of Economic Perspectives, Winter 1992

This paper reviews the actual situation of protection in developing countries, and then discusses the prospective gains from liberalization. Three experiences with liberalization, from three different parts of the world, are sketched: Turkey, Korea, and M...

When Is It Optimal to Delegate: The Theory of Fast-Track Authority

By Levent Celik, Bilgehan Karabay, and John McLaren

American Economic Journal: Microeconomics, August 2015

With fast-track authority (FTA), the US Congress delegates trade policy authority to the president by committing not to amend a trade agreement. Why would it cede such power? We suggest an interpretation in which Congress uses FTA to forestall destructive...

The Long and Short of the Canada-U. S. Free Trade Agreement

By Daniel Trefler

American Economic Review, September 2004

The Canada-U. S. Free Trade Agreement provides a unique window onto the effects of a reciprocal trade agreement on an industrialized economy (Canada). For industries that experienced the deepest Canadian tariff cuts, the contraction of low-productivity pl...

Are Preferential Trading Arrangements Trade-Liberalizing or Protectionist?

By Anne O. Krueger

Journal of Economic Perspectives, Fall 1999

Preferential trade arrangements, and especially free trade agreements, have mushroomed in importance in the 1990s. This has revived research on the effects of these arrangements, both on the welfare of the member countries and those excluded, and on the m...

How Costly Is Protectionism?

By Robert C. Feenstra

Journal of Economic Perspectives, Summer 1992

How costly is protectionism? This paper begins from a U.S. perspective, examining the costs to both the U.S. and other countries from U.S. protectionism. It emphasizes that substantial costs are imposed on foreign countries by U.S. protectionism. These co...

On the Relationship between Preferential and Multilateral Trade Liberalization: The Case of Customs Unions

By Kamal Saggi, Alan Woodland, and Halis Murat Yildiz

American Economic Journal: Microeconomics, February 2013

This paper compares equilibrium outcomes of two games of trade liberalization. In the Bilateralism game, countries choose whether to liberalize trade preferentially via a customs union (CU ), multilaterally, or not at all. The Multilateralism game is a...

Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination

By Devashish Mitra

American Economic Review, December 1999

This paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions. Under certain conditions, free trade turns out to be an equilibrium outcome either when the government has a high affin...

Is Free Trade Passe?

By Paul R. Krugman

Journal of Economic Perspectives, Fall 1987

If there were an Economist's Creed, it would surely contain the affirmations "I understand the Principle of Comparative Advantage" and "I advocate Free Trade." Yet the case for free trade is currently more in doubt than at any time since the 1817 publicat...

The Impact of NAFTA on the United States

[Symposium: The North American Economy]

By Mary E. Burfisher, Sherman Robinson, and Karen Thierfelder

Journal of Economic Perspectives, Winter 2001

We describe the main economic arguments posed for and against the North American Free Trade Agreement (NAFTA) during the U.S. policy debate. To evaluate these arguments, we analyze recent trade data and survey post-NAFTA studies. We find that both the U.S...

Correspondence

By John Komlos

Journal of Economic Perspectives, Fall 1988

Correspondence regarding: Is Free Trade Passe? The Making of an Economist