Working Paper: NBER ID: w1228
Authors: David Richardson
Abstract: This paper assesses the place of active trade policy in U.S. industrial change.The growing role of imperfectly competitive multinational corporations provides new arguments for more active U.S. trade policy, as does an increased social consensus that governments should insure what markets do not. Arguments against more active U.S. trade policy stem from its manage ability in a democratic system of checks and balances, from its possible perception as a form of policy aggression, and from the likelihood that there are feasible alternatives to trade policy with smaller implementation costs, administrative costs, incentive costs, and resource-diversion costs. Considered promising among such alternatives are government adjustment programs, foreign-exchange-market intervention, and macroeconomic renovation. Sections 2 and 3 of the paper describe how international economic and policy environments encourage industrial change and pressure U.S. trade policy. Section 4 describes the pros and cons of more active U.S. trade policy where imperfectly competitive industrial structure and missing insurance markets are taken as facts of life. Section 5 assesses alternatives to more active U.S.trade policy, including, in addition to those mentioned above, strict reliance on market forces.
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JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Imperfectly competitive multinational corporations (F23) | More active US trade policy (F13) |
| Increased social consensus for government intervention in markets (D70) | Support for more active trade policy (F13) |
| Negative perceptions of active trade policy (F13) | Public support for trade policies (F13) |
| Alternatives to active trade policy (F13) | Mitigation of need for direct trade policy action (F69) |