Description
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Endogenous tariff formation has been the subject oftheoretical studies that attempt to determine thefundamental economic variables that influence thestructure of industry protection implemented byinternational trade policy makers. An empiricalanalysis of endogenous tariff formation under theframework of a regional trade agreement implementedby the Andean Community Group is offered in thisbook. Econometric models for the group's commonexternal tariff (CET) and for individual countrytariff deviations with respect to the CET areestimated. The causal links among the variables areobtained by using the directed acyclical graphs (DAG)approach, which allows for a refined search forcausal relationships. The approach is particularlyappealing for the analysis of endogenous tradeprotection since it allows analyzing economic systemsthat involve policy intervention. The empiricalanalysis supports classic theoretical models on tradeprotection, such as the equity concern model, theinterest groupand the adding machine model. However,a rather interesting result derived from the DAGanalysis is the feedback interaction that seems tooperate between tariffs and policy variables.
(Author portrait)
Sanchez Gustavo Gustavo A. Sánchez, Ph.d. in Agricultural Economics at Texas A&MUniversity, USA. M.Sc. in Economics-Econometrics at SouthamptomUniversity, UK. Senior Statistician at StataCorp
