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Are trade restrictions counter-cyclical? Evidence from a new aggregate measure

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Listed:
  • Estefania-Flores, Julia
  • Furceri, Davide
  • Hannan, Swarnali A.
  • Ostry, Jonathan D.
  • Rose, Andrew K.

Abstract

We present a new Measure of Aggregate Trade Restrictions (MATR) using data from the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions. MATR is strongly correlated with existing measures of trade restrictiveness but more comprehensive in terms of country and time coverage. Our measure is available for an unbalanced sample of up to 157 countries during 1949–2019. We use our new MATR to re-examine how trade restrictiveness varies with the business cycle. Our results confirm that trade restrictions are typically a-cyclical but there is an important difference across income groups: aggregate trade restrictions are a-cyclical in advanced economies but are counter-cyclical in EMDEs, especially in response to increases in unemployment.

Suggested Citation

  • Estefania-Flores, Julia & Furceri, Davide & Hannan, Swarnali A. & Ostry, Jonathan D. & Rose, Andrew K., 2023. "Are trade restrictions counter-cyclical? Evidence from a new aggregate measure," Journal of Policy Modeling, Elsevier, vol. 45(4), pages 745-767.
    • Handle: RePEc:eee:jpolmo:v:45:y:2023:i:4:p:745-767
    DOI: 10.1016/j.jpolmod.2023.04.008
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    References listed on IDEAS

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    4. Julia Estefania-Flores & Davide Furceri & Mrs. Swarnali A Hannan & Mr. Jonathan David Ostry & Mr. Andrew K. Rose, 2022. "A Measurement of Aggregate Trade Restrictions and their Economic Effects," IMF Working Papers 2022/001, International Monetary Fund.
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    More about this item

    Keywords

    Empirical; Protectionism; Tariffs; Non-tariff barriers; Cycle;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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