TY  - JOUR
AU  - Faruqee,Hamid
AU  - Laxton,Douglas
AU  - Muir,Dirk
AU  - Pesenti,Paolo
TI  - Would Protectionism Defuse Global Imbalances and Spur Economic Activity? A Scenario Analysis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12704
PY  - 2006
Y2  - November 2006
UR  - http://www.nber.org/papers/w12704
L1  - http://www.nber.org/papers/w12704.pdf
N1  - Author contact info:
Hamid Faruqee
International Monetary Fund
700 19th Street
Washington, DC  20431
E-Mail: hfaruqee@imf.org

Douglas Laxton
International Monetary Fund
700 19th Street
Washington, DC  20431
E-Mail: dlaxton@imf.org

Dirk Muir
Bank of Canada
234 Wellington Street, Ottawa ON Canada K1A 0G9
E-Mail: dmuir@bank-banque-canada.ca

Paolo A. Pesenti
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Tel: 212/720-5493
Fax: 212/720-6831
E-Mail: paolo.pesenti@ny.frb.org
AB  - In the evolving debate and analysis of global imbalances, a commonly overlooked issue pertains to rising protectionism. This paper attempts to fill that gap, examining the macroeconomic implications of trade policy changes through the lens of a dynamic general equilibrium model of the world economy encompassing four regional blocs. Simulation exercises are carried out to consider the imposition of uniform and discriminatory tariffs on trading partners as well as the case of tariff retaliation. We also discuss a scenario in which a 'globalization backlash' lowers the degree of competition in import-competing sectors, and compare the implications of higher markups in the product and labor markets.
ER  -