Trade Development and Political Economy presents: Merideth Crowley

Trade Development and Politcal Economy presents: Merideth Crowley on Emerging Economies, Trade Policy, and Macroeconomic Shocks Emerging Economies, Trade Policy, and Macroeconomic Shocks Authors: Chad Bown(The World Bank) and Merideth Crowley(Federal Reserve Bank, Chicago) Abstract: This paper estimates the impact of macroeconomic shocks on the trade policies of thirteen major emerging economies from 1995 through 2010 and provides evidence of a strong countercyclical relationship. First, the authors focus their analysis of import protection on carefully constructed, bilateral measures of the temporary trade barriers (TTBs) – antidumping, safeguards, and countervailing duties – that have become some of the most important time-varying trade policies that emerging markets used since the inception of the WTO. Second, they examine the role of WTO commitments – promises to keep tariffs below specified maximum levels – as a determinant of TTBs. After controlling for this phenomenon as well as bilateral real exchange rate fluctuations, they find strong evidence that new import protection is related to negative macroeconomic shocks. Finally, the broad pattern to the results holds for a restricted sample comprised of the major G20 emerging economies; countries that by 2010 accounted for 18 percent of world merchandise imports and 20 percent of world GDP. Lastly, they find that adoption of a floating currency, in conjunction with a real depreciation, leads to fewer temporary trade barriers in the following year. Short Bio: Meredith Crowley is a senior economist in the economic research department at the Federal Reserve Bank of Chicago. Meredith’s research interests are in international trade and developments in the world economy. Her research on international trade, the World Trade Organization, special forms of import protection and technology adoption has been published in well-known economics journals. Monday, December 3, 2012 4:00 pm 341 Eggers Hall