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Trade policy in majoritarian systems: the case of the U.S

Author

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  • Per G. Fredriksson
  • Xenia Matschke
  • Jenny Minier

Abstract

We provide a theory of trade policy determination that incorporates the protectionist bias inherent in majoritarian systems, suggested by Grossman and Helpman (2005). The prediction that emerges is that in majoritarian systems, the majority party favours industries located disproportionately in majority districts. We test this prediction using U.S. data on tariffs, Congressional campaign contributions, and industry location in districts represented by the majority party over the period 1989–97. We find evidence of a significant majority bias in trade policy: the benefit to being represented by the majority party appears at least as large in magnitude as the benefit to lobbying. On propose une théorie de la détermination de la politique commerciale qui incorpore le tendence protectionniste inhérent aux systèmes électoraux à scrutin majoritaire selon Grossman et Helpman (2005). La prédiction qui en ressort est que, dans un tel système, le parti de la majorité favorise les industries localisées de façon disproportionnée dans les circonscriptions détenues par la majorité. On évalue cette prédiction à l'aide des données sur les tarifs douaniers aux Etats‐Unis, sur les contributions aux campagnes électorales au Congrès, et sur la localisation des industries dans les circonscriptions représentées par le parti de la majorité pour la période 1989–97. Les résultats révèlent un biais significatif dans la politique commerciale : l'avantage d'être représenté par le parti de la majorité s'avère au moins aussi important que l'avantage du lobbying. If they [politicians] are successful, they claim, as a matter of right, the advantages of success. They see nothing wrong in the rule, that to the victor belong the spoils of the enemy. (New York Senator William L. Marcy, referring to the victory of the Jackson Democrats in the election of 1828, in the U.S. Senate, 25 January 1832).1

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  • Per G. Fredriksson & Xenia Matschke & Jenny Minier, 2011. "Trade policy in majoritarian systems: the case of the U.S," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 44(2), pages 607-626, May.
  • Handle: RePEc:wly:canjec:v:44:y:2011:i:2:p:607-626
    DOI: 10.1111/j.1540-5982.2011.01646.x
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    References listed on IDEAS

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    1. Kishore Gawande & Usree Bandyopadhyay, 2000. "Is Protection for Sale? Evidence on the Grossman-Helpman Theory of Endogenous Protection," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 139-152, February.
    2. Matschke, Xenia N. & Sherlund, Shane M, 2003. "Do Labor Issues Matter In The Determination Of U.S. Trade Policy? An Empirical Reevaluation," Santa Cruz Department of Economics, Working Paper Series qt0sn637k8, Department of Economics, UC Santa Cruz.
    3. Baldwin, Robert E & Magee, Christopher S, 2000. "Is Trade Policy for Sale? Congressional Voting on Recent Trade Bills," Public Choice, Springer, vol. 105(1-2), pages 79-101, October.
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    6. Gene M. Grossman & Elhanan Helpman, 2005. "A Protectionist Bias in Majoritarian Politics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(4), pages 1239-1282.
    7. Nicola Persico & Alessandro Lizzeri, 2001. "The Provision of Public Goods under Alternative Electoral Incentives," American Economic Review, American Economic Association, vol. 91(1), pages 225-239, March.
    8. Xenia Matschke & Shane M. Sherlund, 2006. "Do Labor Issues Matter in the Determination of U.S. Trade Policy? An Empirical Reevaluation," American Economic Review, American Economic Association, vol. 96(1), pages 405-421, March.
    9. Theo Eicher & Thomas Osang, 2002. "Protection for Sale: An Empirical Investigation: Comment," American Economic Review, American Economic Association, vol. 92(5), pages 1702-1710, December.
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    11. Torsten Persson & Guido Tabellini, 2004. "Constitutional Rules and Fiscal Policy Outcomes," American Economic Review, American Economic Association, vol. 94(1), pages 25-45, March.
    12. Carolyn L. Evans, 2009. "A Protectionist Bias In Majoritarian Politics: An Empirical Investigation," Economics and Politics, Wiley Blackwell, vol. 21(2), pages 278-307, July.
    13. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems and Public Spending," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 609-657.
    14. Josh Ederington & Jenny Minier, 2008. "Reconsidering the empirical evidence on the Grossman-Helpman model of endogenous protection," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 501-516, May.
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    16. Matschke, Xenia, 2008. "Costly revenue-raising and the case for favoring import-competing industries," Journal of International Economics, Elsevier, vol. 74(1), pages 143-157, January.
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    Cited by:

    1. Giacomo A. M. Ponzetto & Maria Petrova & Ruben Enikolopov, 2008. "The Dracula effect: voter information and trade policy," Economics Working Papers 1296, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2020.
    2. Celik, Levent & Karabay, Bilgehan & McLaren, John, 2013. "Trade policy-making in a model of legislative bargaining," Journal of International Economics, Elsevier, vol. 91(2), pages 179-190.
    3. Xiangjun Ma & John McLaren, 2018. "A Swing-State Theorem, with Evidence," NBER Working Papers 24425, National Bureau of Economic Research, Inc.
    4. Lake, James, 2015. "Revisiting the link between PAC contributions and lobbying expenditures," European Journal of Political Economy, Elsevier, vol. 37(C), pages 86-101.
    5. Kagitani, Koichi & Harimaya, Kozo, 2017. "Electoral motives, constituency systems, ideologies, and a free trade agreement: The case of Japan joining the Trans-Pacific Partnership negotiations," Journal of the Japanese and International Economies, Elsevier, vol. 45(C), pages 51-66.
    6. Adina Ardelean & Carolyn L. Evans, 2013. "Electoral systems and protectionism: an industry‐level analysis," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(2), pages 725-764, May.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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