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Macroeconomic Factors in Trade Disputes: Insights and Policy Perspectives

Explore how macroeconomic factors influence trade disputes, focusing on high/middle/low-income nations, protectionism, and global vs national variables. Covering historical events and economic theories, this study delves into the relevance and policy implications to deepen understanding and provide fresh perspectives on trade conflicts. Previous studies and models are examined, showcasing the impact of macroeconomic environments on the initiation and resolution of trade disputes.

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Macroeconomic Factors in Trade Disputes: Insights and Policy Perspectives

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  1. Trade disputes and Macroeconomics JONG-EUN LEE OECD, Economic Department (SEJONG UNIVERSITY, Seoul, KOREA)

  2. Questions I want to answer Macroeconomic factors matter in initiation of Trade Disputes? Protectionism vs. case-specific reason High/Middle/Low income countries World vs. national variables

  3. Why is it interesting? Provide a useful policy perspectives (not dragged by cliché or bored with theories) Deeper understanding for trade disputes Coverage

  4. History • Great Depression/ Smoot-Hawley Tariff Act • 1970s oil crisis/creeping protectionism • 1980s Argentina • Asian Financial Crisis • Democrat and Republican • Financial crisis in 2008/ tariff, anti-dumping, subsidies and bailout packages • Time to re-embrace globalism

  5. WTO Dispute Settlement Mechanism Fairness and Enforcement Two tiers Sub-Saharan countries

  6. High income Middle income Low income

  7. International Macroeconomic Theory • The Mundell Fleming Model • The Dornbusch-Fischer Model • Computable General Equilibrium • Dynamic Stochastic General Equilibrium - New Keynesian DSGE - Real Business Cycle

  8. Previous studies • Grossman and Helpman(1994): political equilibrium where elected gov’t and interest groups interact in trade policy-making • Gawande and Bandyopadhyay(2000) • Jallab(2007): Anti-dumping cases with industry specific variables. Probit • Mah and Kim(2006) • Jensen(2007)

  9. Probit

  10. Conclusion Macroeconomic environments matter. High/Middle/Low show different patterns Nation-wide macro variables more significant than world-wide macro variables.

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