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Protection for Free? the Political Economy of U.S. Tariff suspensions
Author:
Ms. Prachi Mishra
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,
Rodney D. Ludemanull

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Anna Maria Maydanull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2010: Issue 211
Language:
English
Publication Date:
01 Sep 2010
DOI:
https://doi.org/10.5089/9781455205424.001
ISBN:
9781455205424
ISSN:
1018-5941
Pages:
48
Keywords:
WP; mover accent; political organization; trade policy; political economy; opponent firm; lobbying expenditure; proponent firm; firm level; tariff suspension; Tariffs; Imports; Housing
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper studies the political influence of individual firms on Congressional decisions to suspend tariffs on U.S. imports of intermediate goods. We develop a model in which firms influence the government by transmitting information about the value of protection, via costless messages (cheap-talk) and costly messages (lobbying). We estimate our model using firm-level data on tariff suspension bills and lobbying expenditures from 1999-2006, and find that indeed verbal opposition by import-competing firms, with no lobbying, significantly reduces the probability of a suspension being granted. In addition, lobbying expenditures by proponent and opponent firms sway this probability in opposite directions.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2010: Issue 211