Political economy of change in trade restrictiveness: Theory and evidence

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

PhD Seminar (Econ)

Date & time

Friday 09 August 2013


Coombs Seminar Room A, Coombs Building, Fellows Road, ANU


Jagath Dissanayake


Robert Sparrow

We study the implications of reference dependency and loss aversion features of individual preferences in trade policy determination and show these behavioural features help explain why governments change the trade restrictiveness in order to cushion the domestic prices from world price shocks. We show this change comes irrespective of special interest groups lobby the government or not. Using a global dataset on agricultural distortions, we find empirical evidence is not inconsistent with our model predictions.

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