Author: Caroline L. Freund
Publisher: World Bank Publications
ISBN:
Category : Commercial policy
Languages : en
Pages : 35
Book Description
"Freund and Özden provide new survey evidence showing that loss aversion and reference dependence are important in shaping people's perception of trade policy. Under the assumption that agents' welfare functions exhibit these behavioral elements, they analyze a model with a welfare-maximizing government and with the lobbying framework of Grossman and Helpman (1994). The policy implications of the augmented models differ in three important ways: There is a region of compensating protection, where a decline in the world price leads to an offsetting increase in protection, such that a constant domestic price is maintained; Protection following a single negative price shock will be persistent; Irrespective of the extent of lobbying, there will be a deviation from free trade that tends to favor loss-making industries. The augmented models are more consistent with the observed structure of protection and, in particular explain why many trade policy instruments are explicitly designed to maintain prices at a given level. This paper-- a product of the Trade Team, Development Research Group-- is part of a larger effort in the group to analyze trade policy formulation"-- World Bank web site.
Loss Aversion and Trade Policy
Author: Caroline L. Freund
Publisher: World Bank Publications
ISBN:
Category : Commercial policy
Languages : en
Pages : 35
Book Description
"Freund and Özden provide new survey evidence showing that loss aversion and reference dependence are important in shaping people's perception of trade policy. Under the assumption that agents' welfare functions exhibit these behavioral elements, they analyze a model with a welfare-maximizing government and with the lobbying framework of Grossman and Helpman (1994). The policy implications of the augmented models differ in three important ways: There is a region of compensating protection, where a decline in the world price leads to an offsetting increase in protection, such that a constant domestic price is maintained; Protection following a single negative price shock will be persistent; Irrespective of the extent of lobbying, there will be a deviation from free trade that tends to favor loss-making industries. The augmented models are more consistent with the observed structure of protection and, in particular explain why many trade policy instruments are explicitly designed to maintain prices at a given level. This paper-- a product of the Trade Team, Development Research Group-- is part of a larger effort in the group to analyze trade policy formulation"-- World Bank web site.
Publisher: World Bank Publications
ISBN:
Category : Commercial policy
Languages : en
Pages : 35
Book Description
"Freund and Özden provide new survey evidence showing that loss aversion and reference dependence are important in shaping people's perception of trade policy. Under the assumption that agents' welfare functions exhibit these behavioral elements, they analyze a model with a welfare-maximizing government and with the lobbying framework of Grossman and Helpman (1994). The policy implications of the augmented models differ in three important ways: There is a region of compensating protection, where a decline in the world price leads to an offsetting increase in protection, such that a constant domestic price is maintained; Protection following a single negative price shock will be persistent; Irrespective of the extent of lobbying, there will be a deviation from free trade that tends to favor loss-making industries. The augmented models are more consistent with the observed structure of protection and, in particular explain why many trade policy instruments are explicitly designed to maintain prices at a given level. This paper-- a product of the Trade Team, Development Research Group-- is part of a larger effort in the group to analyze trade policy formulation"-- World Bank web site.
Loss Aversion and Trade Policy
Author: Caroline L. Freund
Publisher:
ISBN:
Category :
Languages : en
Pages : 35
Book Description
Freund and Ozden provide new survey evidence showing that loss aversion and reference dependence are important in shaping people's perception of trade policy. Under the assumption that agents' welfare functions exhibit these behavioral elements, they analyze a model with a welfare-maximizing government and with the lobbying framework of Grossman and Helpman (1994). The policy implications of the augmented models differ in three important ways:- There is a region of compensating protection, where a decline in the world price leads to an offsetting increase in protection, such that a constant domestic price is maintained.- Protection following a single negative price shock will be persistent.- Irrespective of the extent of lobbying, there will be a deviation from free trade that tends to favor loss-making industries.The augmented models are more consistent with the observed structure of protection and, in particular explain why many trade policy instruments are explicitly designed to maintain prices at a given level.This paper - a product of the Trade Team, Development Research Group - is part of a larger effort in the group to analyze trade policy formulation.
Publisher:
ISBN:
Category :
Languages : en
Pages : 35
Book Description
Freund and Ozden provide new survey evidence showing that loss aversion and reference dependence are important in shaping people's perception of trade policy. Under the assumption that agents' welfare functions exhibit these behavioral elements, they analyze a model with a welfare-maximizing government and with the lobbying framework of Grossman and Helpman (1994). The policy implications of the augmented models differ in three important ways:- There is a region of compensating protection, where a decline in the world price leads to an offsetting increase in protection, such that a constant domestic price is maintained.- Protection following a single negative price shock will be persistent.- Irrespective of the extent of lobbying, there will be a deviation from free trade that tends to favor loss-making industries.The augmented models are more consistent with the observed structure of protection and, in particular explain why many trade policy instruments are explicitly designed to maintain prices at a given level.This paper - a product of the Trade Team, Development Research Group - is part of a larger effort in the group to analyze trade policy formulation.
Loss Aversion and Trade Policy
Author: Caroline Freund
Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
This paper provides new survey evidence showing that loss aversion and reference dependence are important in shaping people's perception of trade policy. Under the assumption that agents' welfare functions exhibit these behavioral elements, we analyze a model with a welfare-maximizing government and with the lobbying framework of Grossman and Helpman (1994). The policy implications of the augmented models differ in three important ways. One, there is a region of compensating protection, where a decline in the world price leads to an offsetting increase in protection, such that a constant domestic price is maintained. Two, protection following a single negative price shock will be persistent. Three, irrespective of the extent of lobbying, there will be a deviation from free trade that tends to favor loss-making industries. The augmented models are more consistent with the observed structure of protection, and in particular, explain why many trade policy instruments are explicitly designed to maintain prices at a given level.
Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
This paper provides new survey evidence showing that loss aversion and reference dependence are important in shaping people's perception of trade policy. Under the assumption that agents' welfare functions exhibit these behavioral elements, we analyze a model with a welfare-maximizing government and with the lobbying framework of Grossman and Helpman (1994). The policy implications of the augmented models differ in three important ways. One, there is a region of compensating protection, where a decline in the world price leads to an offsetting increase in protection, such that a constant domestic price is maintained. Two, protection following a single negative price shock will be persistent. Three, irrespective of the extent of lobbying, there will be a deviation from free trade that tends to favor loss-making industries. The augmented models are more consistent with the observed structure of protection, and in particular, explain why many trade policy instruments are explicitly designed to maintain prices at a given level.
The Effects of Loss Aversion on Trade Policy
Trade Policy and Loss Aversion
Author: Caroline Freund
Publisher:
ISBN:
Category : Electronic book
Languages : en
Pages :
Book Description
Publisher:
ISBN:
Category : Electronic book
Languages : en
Pages :
Book Description
The Psychology of Trade Policy
Author: Eric Charles Todrys
Publisher:
ISBN:
Category : Free trade
Languages : en
Pages : 216
Book Description
Publisher:
ISBN:
Category : Free trade
Languages : en
Pages : 216
Book Description
Political Economy of Altering Trade Restrictiveness
Author: Jagath Dissanayake
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
We study the implications of reference dependency and loss aversion features of individual preferences in trade policy determination and show these behavioural features help explain why governments change the trade restrictiveness in order to cushion the domestic prices from world price shocks. We show this change comes irrespective of special interest groups lobby the government or not.
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
We study the implications of reference dependency and loss aversion features of individual preferences in trade policy determination and show these behavioural features help explain why governments change the trade restrictiveness in order to cushion the domestic prices from world price shocks. We show this change comes irrespective of special interest groups lobby the government or not.
Risk Aversion Terms of Trade Uncertainty and Trade Policy
Author: James H. Cassing
Publisher:
ISBN: 9780731605705
Category : Commerce
Languages : en
Pages : 11
Book Description
Publisher:
ISBN: 9780731605705
Category : Commerce
Languages : en
Pages : 11
Book Description
Law, Psychology, and Morality
Author: Eyal Zamir
Publisher: Oxford University Press, USA
ISBN: 0199972052
Category : Business & Economics
Languages : en
Pages : 278
Book Description
Prospect theory posits that people do not perceive outcomes as final states of wealth or welfare, but rather as gains or losses in relation to some reference point. People are generally loss averse: the disutility generated by a loss is greater than the utility produced by a commensurate gain. Loss aversion is related to such phenomena as the status quo and omission biases, the endowment effect, and escalation of commitment. The book systematically analyzes the relationships between loss aversion and the law.
Publisher: Oxford University Press, USA
ISBN: 0199972052
Category : Business & Economics
Languages : en
Pages : 278
Book Description
Prospect theory posits that people do not perceive outcomes as final states of wealth or welfare, but rather as gains or losses in relation to some reference point. People are generally loss averse: the disutility generated by a loss is greater than the utility produced by a commensurate gain. Loss aversion is related to such phenomena as the status quo and omission biases, the endowment effect, and escalation of commitment. The book systematically analyzes the relationships between loss aversion and the law.
The Collapse of Global Trade, Murky Protectionism, and the Crisis
Author: Richard E. Baldwin
Publisher:
ISBN: 9781907142239
Category : Business & Economics
Languages : en
Pages : 112
Book Description
The global financial crisis of 2008/9 is the Great Depression of the 21st century. For many though, the similarities stop at the Wall Street Crash as the current generation of policymakers have acted quickly to avoid the mistakes of the past. Yet the global crisis has made room for mistakes all of its own. While governments have apparently kept to their word on refraining from protectionist measures in the style of 1930s tariffs, there has been a disturbing rise in "murky protectionism." Seemingly benign, these crisis-linked policies are twisted to favour domestic firms, workers and investors. This book, first published as an eBook on VoxEU.org in March 2009, brings together leading trade policy practitioners and experts - including Australian Trade Minister Simon Crean and former Mexican President Ernesto Zedillo. Initially its aim was to advise policymakers heading in to the G20 meeting in London, but since the threat of murky protectionism persists, so too do their warnings.
Publisher:
ISBN: 9781907142239
Category : Business & Economics
Languages : en
Pages : 112
Book Description
The global financial crisis of 2008/9 is the Great Depression of the 21st century. For many though, the similarities stop at the Wall Street Crash as the current generation of policymakers have acted quickly to avoid the mistakes of the past. Yet the global crisis has made room for mistakes all of its own. While governments have apparently kept to their word on refraining from protectionist measures in the style of 1930s tariffs, there has been a disturbing rise in "murky protectionism." Seemingly benign, these crisis-linked policies are twisted to favour domestic firms, workers and investors. This book, first published as an eBook on VoxEU.org in March 2009, brings together leading trade policy practitioners and experts - including Australian Trade Minister Simon Crean and former Mexican President Ernesto Zedillo. Initially its aim was to advise policymakers heading in to the G20 meeting in London, but since the threat of murky protectionism persists, so too do their warnings.