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GTAP Resource #1729

"Using State-level Simulations in a Political Economy Model of U.S. Trade Policy"
by Arce, Hugh, Bob Koopman and Marinos Tsigas

This paper examines whether simulated state-level output effects resulting from changes in international prices correlate well with recent trade-policy votes in the U.S. Senate. A large body of literature has examined the political-economy determinants of U.S. congressional voting patterns for legislation ratifying recent trade agreements such as the NAFTA and the Uruguay Round of multi-lateral trade negotiations (URA). Most of these empirical analyses identify political and economic factors such as campaign contributions from labor and business groups, the degree of unionization within a state or congressional district, and general economic conditions in the state or district, just to name a few, as significant factors. This paper’s contribution to the literature is to use simulated state-level impacts of trade changes obtained from an applied general equilibrium (AGE) model to explain recent U.S. Senate votes on bills affecting U.S. trade policy. First, an AGE model of the U.S. economy depicting the 50 states and over 500 sectors is used to simulate changes to gross state product (GSP) that result from a 1-percent change in both import and export prices for selected U.S. sectors. These state-level effects are then used as explanatory variables in an econometric, political economy model of trade policy.

Resource Details (Export Citation) GTAP Keywords
Category: 2005 Conference Paper
Status: Published
By/In: Public Choice
Date: 2008
Created: Koopman, B. (4/29/2005)
Updated: Tsigas, M. (3/18/2008)
Visits: 2,977
No keywords have been specified.

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