The 2008 Financial Crisis and the Lack of Retaliatory Trade Intervention

No 21853, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The 2008 financial crisis did not precipitate global retaliatory trade intervention, in seeming contrast to the Great Depression in 1930s. This paper discusses the influence of model structure in optimal tariff (OT) calculations in explaining this puzzle. We emphasize how earlier literature reports high optimal tariffs in numerical calculation (of a hundred of percent) but only uses simple trade models. We use numerical general equilibrium calibration and simulation methodology to calculate optimal tariffs both with and without retaliation in a series of observationally equivalent models, and explore the influence of model structures on optimal tariff levels. We gradually add more realistic features into basic general equilibrium model, and show sharply decline optimal tariffs, which suggests that trade retaliation incentives effectively disappear with the deepening of globalization in 2008 compared to 1930.

JEL-codes: C63 F11 F13 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-his
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published as Chunding Li & John Whalley & Chuantian He & Chuangwei Lin, 2021. "The 2008 Financial Crisis and the Lack of Retaliatory Trade Intervention," CESifo Economic Studies, vol 67(1), pages 78-105.

Downloads: (external link)
http://www.nber.org/papers/w21853.pdf (application/pdf)

Related works:
Journal Article: The 2008 Financial Crisis and the Lack of Retaliatory Trade Intervention (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:21853

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w21853

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().