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Real exchange rate changes as a cause of protectionism

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Summary

In this article, the various ways in which a real appreciation of the exchange rate can induce an increase in the overall or sector-specific level of protection are surveyed. In a normative framework, a real appreciation can justify temporary government interference, including trade policy, aimed at protecting (part of) the traded-goods sector. In addition, a positive approach of political decision-making on protection has been applied in order to explain actual government behaviour. After a real appreciation the balance of influence between the interest groups involved will change in such a way that an increase in the level of protection results.

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Authors and Affiliations

  1. University of Amsterdam and Tinbergen Institute, Netherlands

    J. K. Martijn

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  1. J. K. Martijn
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Additional information

This paper is part of the research project ‘Exchange-rate policy and monetary policy in international dependence.’ I am indebted to the participants in that project, and especially to Henk Jager and Eelke de Jong, for their comments on an earlier version of this paper.

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Martijn, J.K. Real exchange rate changes as a cause of protectionism. De Economist 137, 328–350 (1989). https://doi.org/10.1007/BF02115698

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