Results-Oriented Trade Policy |
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| Authors: | Wilfred J. Ethier Henrik Horn |
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| Affiliation: | Ethier: Department of Economics, University of Pennsylvania, Philadelphia, PA 19104–6297, USA. Tel: (215) 898–5105, Fax: (215) 573–2072. Horn: Institute for International Economic Studies, Stockholm University, Stockholm S-106 91, Sweden. Tel: 46-8-16 30 60, Fax: 46-8-16 14 43. Research for this paper was supported by the Bank of Sweden Tercentenary Foundation, and we are also grateful for the hospitality of the International Centre for Economic Research in Turin. We thank Elhanan Helpman, Arye Hillman, and Kunio Kawamata for helpful discussions, and two anonymous referees for their suggestions. The paper has also benefited from comments received in seminars at Kobe, Kyoto, Hokkaido, Penn State, Rochester, and Tsukuba Universities. |
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| Abstract: | We construct a model of economic policy determination by an executive who controls a domestic policy instrument and who can influence, but not completely control, the conduct of trade policy. The executive exploits a polictical linkage between the policies. These circumstances can motivate implementation of a results-oriented trade policy by the government of a trading partner. We analyze the implications of such a policy under alternative situations. |
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