Trade policy in majoritarian systems: the case of the U.S

Trade policy in majoritarian systems: the case of the U.S

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Article ID: iaor201111962
Volume: 44
Issue: 2
Start Page Number: 607
End Page Number: 626
Publication Date: May 2011
Journal: Canadian Journal of Economics/Revue canadienne d'conomique
Authors: , ,
Keywords: forecasting: applications, politics
Abstract:

We provide a theory of trade policy determination that incorporates the protectionist bias inherent in majoritarian systems, suggested by Grossman and Helpman (2005). The prediction that emerges is that in majoritarian systems, the majority party favours industries located disproportionately in majority districts. We test this prediction using U.S. data on tariffs, Congressional campaign contributions, and industry location in districts represented by the majority party over the period 1989–97. We find evidence of a significant majority bias in trade policy: the benefit to being represented by the majority party appears at least as large in magnitude as the benefit to lobbying.

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