Working Paper: NBER ID: w1321
Authors: Robert E. Baldwin
Abstract: Disappointing recent growth rates, the emergence of structurally unfavorable income and employment conditions, and important institutional changes in the international trading environment have caused policy officials in the advanced industrial nations to reconsider the proper mix of reactive versus active trade policy in easing adjustment to labor market disruptions and dealing with structural changes. This paper first examines the implications of traditional trade theory as well as the new theoretical developments emphasizing imperfect markets for this policy reevaluation. Alternative policy options are then considered within a framework that recognizes the imperfect real world conditions within which trade policies must operate.
Keywords: trade policy; income; employment; international trade
JEL Codes: F13; F16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reactive trade policies (F13) | mitigate adverse employment effects (J68) |
| reactive trade policies (F13) | stabilize domestic employment (J68) |
| active trade policies (F13) | increased job creation (J68) |
| active trade policies (F13) | higher income levels (D31) |
| domestic price changes (P22) | employment outcomes (J68) |