Working Paper: NBER ID: w13900
Authors: Susumu Imai; Hajime Katayama; Kala Krishna
Abstract: This paper proposes a new test of the Protection for Sale (PFS) model by Grossman and Helpman (1994). Unlike existing methods in the literature, our approach does not require any data on political organizations. We formally show that the PFS model predicts that the quantile regression of the protection measure on the inverse import penetration ratio divided by the import demand elasticity, should yield a positive coefficient for quantiles close to one. We test this prediction using the data from Gawande and Bandyopadhyay (2000). The results do not provide any evidence favoring the PFS model.
Keywords: Protection for Sale; Quantile Regression; Political Economy
JEL Codes: F13; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| misclassification of industries (L60) | biased parameter estimates (C51) |
| classification error (C38) | disturbance term correlated with inverse import penetration ratio (F14) |
| inverse import penetration ratio (F10) | protection measure for politically organized industries (L59) |