DP8937 Protectionism Isn?t Counter-Cyclic (anymore)

Author(s): Andrew K Rose
Publication Date: April 2012
Keyword(s): barrier, business cycle, data, empirical, international, panel, policy, recession, tariff, trade
JEL(s): E32, F13
Programme Areas: International Macroeconomics, International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8937

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 no longer accurate. In the post-war era, protectionism has not actually moved counter-cyclically. Tariffs and non-tariff barriers do not systematically rise during cyclic downturns; if anything, they tend to fall. I document this new stylized fact with a wide panel of data, using a variety of measures of protectionism and business cycles. I also provide some hints as to why protectionism is no longer counter-cyclic.