Showing papers by "Robert C. Feenstra published in 1987"
Posted Content•
TL;DR: In this paper, the authors examined the effect of tariffs and exchange rates on U.S. prices of Japanese cars, trucks and motorcycles, and found that the pass-through relation varies across products, ranging from about 0.6 for trucks to unity for motorcycles.
Abstract: This paper examines the effect of tariffs and exchange rates on U.S. prices of Japanese cars, trucks and motorcycles. In particular, we test whether the long run pass-through of tariffs and exchange rates are identical: the symmetry hypothesis. We find that this hypothesis is easily accepted in our sample. We also find that the pass-through relation varies across products, ranging from about 0.6 for trucks to unity for motorcycles. These coefficients have very different implications for trade policy. We explain the results based on demand, cost and institutional conditions in each industry. We also find weak evidence that the pass-through of exchange rates has fallen in more recent years.
410 citations
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TL;DR: In this article, a home government with political pressure to restrict trade, at the expense of foreigners, is compensated with an income transfer, which can be thought of as a portion of the tariff revenues or quota rents.
Abstract: In this paper we consider a home government with political pressure to restrict trade, at the expense of foreigners The foreign country is compensated with an income transfer, which can be thought of as a portion of the tariff revenues or quota rents In this setting the two countries should negotiate over the level of tariff and transfer of rents, depending on the level of political pressure at home However, if this pressure cannot be directly observed abroad, then the home country may have an incentive to claim arbitrarily high political need and seek corresponding high trade barriers We resolve this problem by determining incentive compatible trade policies, in which the home government has no incentive to overstate (or understate) the political pressure for protection
112 citations
Posted Content•
TL;DR: In this article, the authors examined the effect of tariffs and exchange rates on U.S. prices of Japanese cars, trucks and motorcycles, and found that the pass-through relation varies across products, ranging from about 0.6 for trucks to unity for motorcycles.
Abstract: This paper examines the effect of tariffs and exchange rates on U.S. prices of Japanese cars, trucks and motorcycles. In particular, we test whether the long run pass-through of tariffs and exchange rates are identical: the symmetry hypothesis. We find that this hypothesis is easily accepted in our sample. We also find that the pass-through relation varies across products, ranging from about 0.6 for trucks to unity for motorcycles. These coefficients have very different implications for trade policy. We explain the results based on demand, cost and institutional conditions in each industry. We also find weak evidence that the pass-through of exchange rates has fallen in more recent years.
74 citations
TL;DR: In this article, the authors measure the quality change which has occurred in U.S. steel imports during the 1969-74 VRA, using an index number method, and derive a measure of welfare cost.
Abstract: In this paper we measure the quality change which has occurred in U.S. steel imports during the 1969-74 VRA, using an index number method. Under this approach, the yearly changes in unit values is broken into three components: a quality-adjusted or pure price index; a quality index, which measures changes in the product mix; and a supplier index, which measures changes in the source of supply. We also derive a measure of welfare cost, which equals the inverse of a Paasche price index minus the inverse of an exact price index. Over the 1969-74 VRA period we find quality upgrading of 7.4 percent in U.S. steel imports, which occurs most strongly in the first year. The welfare cost of quality change varies around one percent of import expenditure during 1970-73. This cost is at least as large as the conventional deadweight loss triangle, but smaller than the transfer of quota rents.
54 citations
Posted Content•
TL;DR: In this article, the authors measure the quality change which has occurred in U.S. steel imports during the 1969-74 VRA, using an index number method, and derive a measure of welfare cost.
Abstract: In this paper we measure the quality change which has occurred in U.S. steel imports during the 1969-74 VRA, using an index number method. Under this approach, the yearly changes in unit values is broken into three components: a quality-adjusted or pure price index; a quality index, which measures changes in the product mix; and a supplier index, which measures changes in the source of supply. We also derive a measure of welfare cost, which equals the inverse of a Paasche price index minus the inverse of an exact price index. Over the 1969-74 VRA period we find quality upgrading of 7.4 percent in U.S. steel imports, which occurs most strongly in the first year. The welfare cost of quality change varies around one percent of import expenditure during 1970-73. This cost is at least as large as the conventional deadweight loss triangle, but smaller than the transfer of quota rents.
32 citations
TL;DR: In this paper, the authors considered a two-country trade model with production uncertainty and considered incentive compatible trade policies, which are designed to be truth revealing while partially sharing the production risk.
Abstract: A two-country trade model with production uncertainty is considered. If complete contingent markets do not exist, it is desirable for governments to adopt some trade policies to share the production risk. A full information policy involves incomes transfers across countries, which can be achieved by equal import tariffs and export subsidies. With incomplete information we consider incentive compatible trade policies, which are designed to be truth revealing while partially sharing the production risk. In this case the tariff in one country may differ from the export subsidy abroad.
16 citations
Posted Content•
TL;DR: In this article, the authors consider a home government with political pressure to restrict trade, at the expense of foreigners, and determine incentive compatible trade policies, in which the home government has no incentive to overstate (or understate) the political pressure for protection.
Abstract: In this paper we consider a home government with political pressure to restrict trade, at the expense of foreigners. The foreign country is compensated with an income transfer, which can be thought of as a portion of the tariff revenues or quota rents. In this setting the two countries should negotiate over the level of tariff and transfer of rents, depending on the level of political pressure at home. However, if this pressure cannot be directly observed abroad, then the home country may have an incentive to claim arbitrarily high political need and seek corresponding high trade barriers . We resolve this problem by determining incentive compatible trade policies, in which the home government has no incentive to overstate (or understate) the political pressure for protection.
8 citations