Protectionism Isn't Counter‐Cyclic (anymore)
Conventional wisdom holds that protectionism is counter-cyclic; tariffs, quotas and the like grow during recessions. While that may have been a valid description of the data before the Second World War, it is now inaccurate. In the post-war era, protectionism has not actually moved counter-cyclically. Tariffs and non-tariff barriers simply do not rise systematically during cyclic downturns. I document this new stylized fact with a panel of data covering over 60 countries and 30 years, using eighteen measures of protectionism and seven of business cycles. I also provide some hints as to why protectionism is no longer counter-cyclic.
B.T. Rocca Jr. Professor of International Business, Associate Dean, and Chair of the Faculty, Haas School of Business at the University of California, Berkeley, NBER Research Associate, and CEPR Research Fellow. The data set, key output, and a current version of this paper are available at my website. For help and comments, I thank: Richard Baldwin, Chad Bown, Meredith Crowley, Lawrence Edwards, Jeffry Frieden, Rob Johnson, Tom Prusa, and seminar participants at Boston College. For hospitality during the course of writing this paper, I thank the Free University of Berlin, the Hong Kong Institute for Monetary Research, and the University of Cape Town. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
“Protectionism isn’t Counter-Cyclic (anymore)”, NBER WP 18,062, CEPR DP 8937, Economic Policy 2013.