Do protectionist trade policies integrate domestic markets? : evidence from the Canada-U.S. softwood lumber dispute / by Jinggang Guo and Craig M.T. Johnston.: FB3-5/2020-10E-PDF
"We consider the effects of protectionist trade policies on international and domestic market integration, using evidence from the long-standing softwood lumber trade dispute between Canada and the United States. The benefits of trade liberalization are widely acknowledged, including better home-to-foreign price transmission due to reduced tariffs and lower trade costs between countries. Yet in recent years we see efforts to protect specific domestic groups, including producers, through a revival of protectionist trade policies. Such policies could improve the home-to-home price transmission across domestic markets as consumers may seek lower-cost alternatives domestically. We investigate these ideas using a bi-variate three-regime threshold vector error-correction model (TVECM) to examine the spatial price transmission between Canadian and U.S. markets and within U.S. domestic markets. We do that by introducing a structural break at the start of an effective free trade period within our sample. The results suggest that duty-free treatment for imported Canadian softwood lumber substantially lowers the transaction costs between the two nations. Prices are more easily transmitted from the Canadian market to the U.S. at a higher speed, but the speed of price transmission in the reverse direction is not statistically significant. The U.S. domestic market experienced a higher speed of price adjustment across domestic regions prior to the free trade period, which provides evidence that protectionist policies lead to better domestic market integration"--Abstract, page ii.
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publications.gc.ca/pub?id=9.886482&sl=0
Department/Agency | Bank of Canada. |
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Title | Do protectionist trade policies integrate domestic markets? : evidence from the Canada-U.S. softwood lumber dispute / by Jinggang Guo and Craig M.T. Johnston. |
Series title | Staff working paper = Document de travail du personnel, 1701-9397 ; 2020-10 |
Publication type | Series - View Master Record |
Language | [English] |
Format | Electronic |
Electronic document | |
Note(s) | "Last updated: March 23, 2020." Includes bibliographical references (pages 19-20). Includes abstracts in English and French. |
Publishing information | Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2020. ©2020 |
Author / Contributor | Guo, Jinggang, author. |
Description | 1 online resource (iii, 20 pages) : illustrations. |
Catalogue number |
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Subject terms | International economic integration. Softwood industry -- Canada. Softwood industry -- United States. Protectionism -- United States. Tariff on softwood -- United States. Intégration économique internationale. Bois tendres -- Industrie -- Canada. Bois tendres -- Industrie -- États-Unis. Protectionnisme -- États-Unis. Boits tendres -- Droits de douane -- États-Unis. |
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