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Increased protection in the 1980s: Exchange rates and institutions

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Abstract

The strong appreciation of the U.S. dollar between 1980 and 1985 encouraged the substitution of imports for domestically produced goods for a variety of products. This, in turn, increased the demand for trade protection. Many of these demands were satisfied via “apolitical” U.S. antidumping and countervail regulations, yieldingad valorem tariffs well above current average statutory duties. The supply of trade protection is developed via a principal-agent model that describes the potential gains to both the regulatory agency and the legislator. Empirical results support the model specification, finding both exchange rate and political cycles in the use of “apolitical” trade protection.

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Authors and Affiliations

  1. Economic Research Service, U.S. Department of Agriculture, 1301 New York Ave. NW, 20005-4788, Washington, DC

    David A. Stallings

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  1. David A. Stallings
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The views expressed are solely the property of the author and do not reflect those of the Department of Agriculture, the Economic Research Service, or any other agency of the U.S. Government. David Skully and an anonymous referee provided useful suggestions for improvement, but should be held blameless for any errors herein.

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Stallings, D.A. Increased protection in the 1980s: Exchange rates and institutions. Public Choice 77, 493–521 (1993). https://doi.org/10.1007/BF01047857

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