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Why ‘Buy American’ is a Bad Idea but Politicians Still Like it

Title data

Larch, Mario ; Lechthaler, Wolfgang:
Why ‘Buy American’ is a Bad Idea but Politicians Still Like it.
In: Canadian Journal of Economics. Vol. 44 (2011) Issue 3 . - pp. 838-858.
ISSN 1540-5982
DOI: https://doi.org/10.1111/j.1540-5982.2011.01657.x

Official URL: Volltext

Abstract in another language

When the world economy was recently hit by a severe recession, governments all over the world reacted by initiating stimulus packages. Some countries (among them, most notably, China and the US) tried to put special emphasis on their home industries by including “Buy local” clauses into the stimulus package. By analyzing the dynamics of transitory changes of trade barriers as a short-run response to an economic downturn, we show that beggar-thy-neighbor policies do not work. We then come up with two rationales that help to understand why countries nevertheless consider protectionism to be a good response to a recession: (i) the lobbying of domestic, non-exporting firms, and (ii) the relationship between vulnerability, the degree of openness and loss aversion of consumers.

Further data

Item Type: Article in a journal
Refereed: Yes
Keywords: protectionism; trade liberalization; short term shocks
Subject classification: F11, F12, F16
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Economics > Lehrstuhl Volkswirtschaftslehre VI: Empirische Wirtschaftsforschung
Faculties > Faculty of Law, Business and Economics > Department of Economics > Lehrstuhl Volkswirtschaftslehre VI: Empirische Wirtschaftsforschung > Lehrstuhl für Volkswirtschaftslehre VI: Empirische Wirtschaftsforschung - Univ.-Prof. Dr. Mario Larch
Faculties
Faculties > Faculty of Law, Business and Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences > 330 Economics
Date Deposited: 14 Oct 2015 12:13
Last Modified: 02 Nov 2016 08:05
URI: https://eref.uni-bayreuth.de/id/eprint/16602