Working Paper: CEPR ID: DP10582
Authors: Paola Conconi; David Deremer; Georg Kirchsteiger; Lorenzo Trimarchi; Maurizio Zanardi
Abstract: This paper shows that electoral incentives affect the occurrence of trade disputes. Focusing on WTO disputes filed by the United States during the 1995-2012 period, we show that U.S. presidents are more likely to initiate a dispute in the year preceding their re-election date. Moreover, disputes filed by the U.S. tend to target industries that are important to swing states in the presidential election. To explain these regularities, we develop a theoretical model in which an incumbent can file a trade dispute to appeal to voters motivated by reciprocity. The incumbent?s ability to initiate a dispute during the re-election campaign provides an advantage over the challenger, who cannot commit to file the dispute if elected. If voters? ideological preferences are not too strong in favor of either candidate, the incumbent will file a trade dispute to increase his re-election chances.
Keywords: elections; reciprocity; trade disputes
JEL Codes: D63; D72; D78; F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Incumbent's ability to file a dispute can influence voters' decisions based on reciprocity (D72) | chances of re-election (D72) |
| If voters’ ideological preferences are not strongly aligned with either candidate (D79) | competitive advantage for the incumbent (D43) |
| U.S. presidents are more likely to file trade disputes in the year prior to their re-election (F13) | likelihood of filing a trade dispute (F13) |
| Disputes tend to target industries that are significant to swing states (L49) | decision to file disputes (K41) |