Recent Papers by Douglas Irwin

 

Note: Many of these papers are also available from the NBER . You will need Acrobat to view these files.

 

 

The Creation of the GATT.  This Draft:  September 2007.

This chapter tells the story of how we got the GATT in 1947.

 

Trade Restrictiveness and Deadweight Losses from U.S. Tariffs, 1859-1961 . This Draft: August 2007.

This paper uses detailed tariff data to calculate the Anderson-Neary (2005) trade restrictiveness index (TRI) for the United States in 1859 and annually from 1867 to 1961. The TRI is defined as the uniform tariff that yields the same welfare loss as an existing tariff structure. The import-weighted average tariff understates the TRI by about 70 percent over this period. This approach also yields annual estimates of the static welfare loss from the tariff structure; the largest losses occur in the early 1870s (about one percent of GDP) but they fall almost continuously thereafter to less than one-tenth of one percent of GDP by the early 1960s.

 

Tariff Incidence in America's Gilded Age. Journal of Economic History, September 2007.

In the late nineteenth century, the United States imposed high tariffs to protect domestic manufacturers from foreign competition. This paper examines the magnitude of protection given to import-competing producers and the costs imposed on export-oriented producers by focusing on changes in the domestic prices of traded goods relative to non-traded goods. Because the tariff increased the prices of non-traded goods, the degree of protection was much less than indicated by nominal rates of protection; the results here suggest that the 30 percent average tariff on imports yielded just a 12 percent implicit subsidy to import-competing producers while effectively taxing exporters at a rate of 14 percent. The paper also finds that tariff policy redistributed large amounts of income (about 9 percent of GDP) across groups, although the impact on consumers was roughly neutral because they devoted a sizeable share of their expenditures to exportable goods. These findings may explain why import-competing producers pressed for even greater protection in the face of already high tariffs and why consumers (as voters) did not strongly oppose the policy.

 

Antebellum Tariff Politics: Regional Coalitions and Shifting Economic Interests. Journal of Law and Economics, November 2008.

 

Throughout U.S. history, import tariffs been put on a sustained downward path in only two instances: from the mid-1830s until the Civil War and from the mid-1930s to the present. This paper analyzes how the movement toward higher tariffs in the 1820s was reversed for the rest of the antebellum period. In the 1820s, a coalition in Congress between the North and West raised tariffs by exchanging votes on import duties for spending on internal improvements. President Andrew Jackson effectively delinked these issues and destroyed the North-West alliance by vetoing several internal improvements bills. South Carolina’s refusal to enforce the existing high tariffs sparked the nullification crisis and paved the way for the Compromise Tariff of 1833, which phased out tariffs above 20 percent over a nine year period. Although Congress could not credibly commit to implementing the staged reductions or maintaining the lower duties, the growing economic interest of the West in exporting grains – due, ironically, to transportation improvements – gave it a stake in maintaining a lower tariff equilibrium in cooperation with the South.

 

The Antebellum U.S. Iron Industry: Domestic Production and Foreign Competition, coauthored with Joseph H. Davis. This Draft: June 2007.

 

This paper presents new estimates of annual U.S. production of pig iron dating back to 1827. These estimates are used to assess the vulnerability of the antebellum iron industry to foreign competition and the role of the tariff in fostering the industry’s early development. Domestic pig iron production is found to be highly sensitive to changes in import prices. Although import price fluctuations had a much greater impact on U.S. production than changes in import duties, the tariff permitted domestic output to be about one-third to one-half larger than it would have been without protection.

 

Trade Disruptions and America’s Early Industrialization, co-authored with Joseph H. Davis. This Draft: June 2003.

 

Between 1807 and 1815, U.S. imports of manufactured goods were severely cut by Jefferson’s trade embargo, subsequent non-importation measures, and the War of 1812. These disruptions are commonly believed to have spurred early U.S. industrialization by promoting the growth of nascent domestic manufacturers. This paper uses a newly available series on U.S. industrial production to investigate how this protection from foreign competition affected domestic manufacturing. On balance, the trade disruptions did not decisively accelerate U.S. industrialization as trend growth in industrial production was little changed over this period. However, the disruptions may have had a permanent effect in reallocating resources between domestic infant industries (such as cotton textiles) and trade-dependent industries (such as shipbuilding).

 

 

Selected Published Articles.

 

 

The Welfare Cost of Autarky: Evidence from the Jeffersonian Trade Embargo, 1807-1809. Review of International Economics, September 2005.

The United States came close to complete autarky in 1808 as a result of a self-imposed embargo on international shipping from December 1807 to March 1809. Monthly prices of exported and imported goods reveal the embargo’s striking effect on commodity markets and allow a calculation of its welfare effects. The calculations suggest that the embargo cost about 5 percent of America’s 1807 GNP, at a time when the trade share was about 13 percent (domestic exports and shipping earnings). The welfare cost was lower than the trade share because the embargo did not completely eliminate trade and because domestic producers successfully shifted production toward previously imported manufactured goods.

 

The Rise in U.S. Antidumping Actions in Historical Perspective . The World Economy, May 2005.

 

Empirical studies of antidumping activity focus almost exclusively on the period since 1980. This paper puts recent U.S. antidumping experience in historical context by studying the determinants of annual case filings over the past half century. The conventional view that few antidumping cases existed prior to 1980 is not correct, although most did not result in the imposition of duties. The increased number of cases in recent decades largely reflects petitions that target multiple source countries; the number of imported products involved has actually fallen since the mid 1980s. The annual number of antidumping cases is influenced by the unemployment rate, the exchange rate, import penetration (closely related to the decline in average tariffs), and changes in the antidumping law and its enforcement in the early 1980s.

 

Airbus versus Boeing Revisited: International Competition in the Aircraft Market (with Nina Pavcnik). Journal of International Economics, December 2004.

 

This paper examines international competition in the commercial aircraft industry. We estimate a discrete choice, differentiated products demand system for wide-body aircraft and examine the Airbus-Boeing rivalry under various assumptions on firm conduct. We then use this structure to evaluate two trade disputes between the United States and European Union. Our results suggest that the aircraft prices increased by about 3 percent after the 1992 U.S. – E.U. agreement on trade in civil aircraft that limits subsidies. This price hike is consistent with a 5 percent increase in firms’ marginal costs after the subsidy cuts. We also simulate the impact of the future entry of the Airbus A-380 super-jumbo aircraft on the demand for other wide-bodied aircraft, notably the Boeing 747. We find that the A-380 could reduce the market share of the 747 by up to 14.8 percentage points in the long range wide-body market segment (depending upon the discounts offered on the A-380), but would reduce the market for Airbus’s existing wide-bodies by an even greater margin.

The Aftermath of Hamilton's Report on Manufactures . Journal of Economic History, September 2004.

Alexander Hamilton’s Report on Manufactures (1791) is a classic document in the history of U.S. economic policy, but its fate in Congress is not well known. It is commonly believed that the report was never implemented. Although Hamilton’s proposals for bounties (subsidies) failed to receive support, virtually every tariff recommendation put forward in the report was adopted by Congress in early 1792. These tariffs were not highly protectionist duties because Hamilton feared discouraging imports, which were the critical tax base on which he planned to fund the public debt. Indeed, because Hamilton’s policy toward manufacturing was one of encouragement and not protection, those interests shifted their political support from the Federalists to the Jeffersonian Republicans during the 1790s.

Labor Productivity in Britain and America in the Nineteenth Century, co-authored with Stephen Broadberry, Explorations in Economics History, April 2006

A number of writers have recently questioned whether labor productivity or per capita incomes were ever higher in Britain than in the United States. We show that although the United States already had a substantial labor productivity lead in industry as early as 1840, especially in manufacturing, labor productivity was broadly equal in the two countries in agriculture, while Britain was ahead in services. Hence aggregate labor productivity was higher in Britain, particularly since the United States had a larger share of the labor force in low value-added agriculture. U.S. overtaking occurred decisively only during the 1890s, as labor productivity pulled ahead in services and the share of agricultural employment declined substantially. Labor force participation was lower in the United States, so that Britain’s labor productivity advantage in the mid-nineteenth century translated into a larger per capita income lead.

 

 Lost Exceptionalism? Comparative Income and Productivity in Australia and the United Kingdom, 1861-1948, coauthored with Steven N. Broadberry. Economic Record, September 2007.

 

 Australia had one of the highest per capita incomes in the world in the late nineteenth century, although this exceptional position subsequently eroded over time. This paper compares national income and sectoral labour productivity in Australia and the United Kingdom between 1861 and 1948 to uncover the underlying sources of Australia’s high income and the reasons for its subsequent relative decline. We find the country’s higher per capita income was due primarily to higher labour productivity, since labour force participation, although higher in Australiathan in the United States, was lower than in the United Kingdom. Australia had a substantial labour productivity lead in agriculture throughout the period, due to the importance of high-value-added, non-arable farming, and a smaller lead in industry before World War I. The early productivity lead in industry was largely based on the importance of mining, and disappeared as manufacturing became more important. There was little productivity difference in services. These results reaffirm the importance of Australia’s successful exploitation of its natural resource endowments in explaining the country’s high initial income.

 

 The Impact of Federation on Australia's Trade Flows. Economic Record, September 2006.

In 1901, six Australian states joined together in political and economic union, creating an internal free trade area and a common external tariff. This paper investigates the impact of federation on Australia’s internal and international trade flows by studying changes in the “border effect” over this time. This is possible because Australian states reported intra-Australian trade prior to 1901 and for eight years after federation. The results indicate that federation produced little change in Australia’s trade patterns, but that the border effect increased substantially between 1906 and 1909 when the protectionist Lyne Tariff was imposed.

 

Causing Problems? The WTO Review of Causation and Injury Attribution in U.S. Section 201 Cases . The World Trade Review, November 2003.

U.S. safeguard actions have run into problems with the WTO’s Panel and Appellate Body reviews for failing to ensure that injury caused by non-import factors are not attributed to imports. This paper reviews the subtle legal and economic differences between U.S. trade law (Section 201) and the WTO’s Agreement on Safeguards on the non-attribution issue. The paper then resurrects the Kelly (1988) method of attributing injury to various factors as a potential method by which the ITC can ensure that future decisions conform with the Safeguards Agreement. The method is shown to yield results that are consistent with recent ITC safeguard decisions.

 

New Estimates of the Average Tariff of the United States, 1790-1820 . Journal of Economic History, June 2003.

 

This paper presents new estimates of the average tariff on total and dutiable U.S. imports from 1790 to 1820. These previously unavailable series are comparable to the tariff figures available from 1821 in the Historical Statistics of the United States. These early tariffs were much lower, on average, than those imposed later in the nineteenth century. The paper stresses the importance of deducting drawbacks (tariff rebates on imported goods that are subsequently re-exported) from total customs revenue in calculating the average tariff and briefly examines the structure of tariffs across goods.

 

"Interpreting the Tariff-Growth Correlation in the Late Nineteenth Century" . American Economic Review, Papers and Proceedings , May 2002.

This paper argues that the tariff-growth correlation in the late nineteenth century should be interpreted with great care. The paper first describes individual country experiences to examine the possible connections between trade policy and economic growth. The two most rapidly expanding, high tariff countries of the period – Argentina and Canada – grew not because of industrialization arising from import substitution, but rather because of export-led growth in staples. The paper then asks why certain countries chose to impose high tariffs. Many labor-scarce and land-abundant economies – such as Argentina, Canada, and the United States – relied on customs duties to raise government revenue and therefore imposed high tariffs for fiscal reasons. The fact that these countries also, due to those same underlying factor endowments, tended to receive large capital and labor inflows from abroad confounds the inference that high tariffs were somehow responsible for their economic performance.

 

Tariffs and Growth in Late Nineteenth Century America ." The World Economy 24 (January 2001): 15-30.

Were high import tariffs somehow related to the strong U.S. economic growth during the late nineteenth century? This paper examines this frequently mentioned but controversial question and investigates the channels by which tariffs could have promoted growth during this period. The paper shows that: (i) late nineteenth century growth hinged more on population expansion and capital accumulation than on productivity growth; (ii) tariffs may have discouraged capital accumulation by raising the price of imported capital goods; (iii) productivity growth was most rapid in non-traded sectors (such as utilities and services) whose performance was not directly related to the tariff.


Older Published Papers:

 

"The Optimal Tax on Antebellum Cotton Exports." Journal of International Economics, August 2003.

 

"Explaining America's Surge in Manufactured Exports, 1880-1913" , Review of Economics and Statistics, May 2003.

" Does Trade Raise Income? Evidence from the Twentieth Century ," with Marko J. Terviö. Journal of International Economics 58 (October 2002): 1-18.

 

“ Long Run Trends in World Trade and Income,” World Trade Review 1 (March 2002): 89-100.

 

 " Ohlin versus Stolper-Samuelson ." In Ronald Findlay, Lars Jonung, and Mats Lundahl (eds.), Bertil Ohlin: A Centennial Celebration, 1899-1999, Cambridge: MIT Press, 2002.

 

" The Antebellum Tariff on Cotton Textiles Revisited ," (with Peter Temin) Journal of Economic History 61 (September 2001): 777-798.

“ Could the U.S. Iron Industry Have Survived Free Trade After the Civil War ?” Explorations in Economic History 37 (July 2000): 278-299.

 

“ Did Late Nineteenth Century U.S. Tariffs Promote Infant Industries? Evidence from the Tinplate Industry ,” Journal of Economic History 60 (June 2000): 335-360.

 

“ Is Globalization Today Really Different From Globalization a Hundred Years Ago? ” (with Michael Bordo and Barry Eichengreen), Brookings Trade Forum, 1999 (Washington, D.C.: The Brookings Institution, 1999), pp. 1-50.

 

“ Interests, Institutions, and Ideology in Securing Policy Change: The Republican Conversion to Trade Liberalization after Smoot-Hawley ” (with Randall S. Kroszner), Journal of Law and Economics 42 (October 1999): 643-673.

 

“Antidumping: The Semiconductor Industry,” Brookings Trade Forum, 1998 (Washington, D.C.: The Brookings Institution, 1998), pp. 173-200.

 

“ Changes in U.S. Tariffs: The Role of Import Prices and Commercial Policies ,” American Economic Review 88 (September 1998): 1015-1026.

 

“ The Smoot-Hawley Tariff: A Quantitative Assessment ,” Review of Economics and Statistics 80 (May 1998): 326-334.

 

“ Higher Tariffs, Lower Revenues? Analyzing the Fiscal Aspects of the ‘Great Tariff Debate of 1888 ,’” Journal of Economic History 58 (March 1998): 59-72.

 

“ From Smoot-Hawley to Reciprocal Trade Agreements: Changing the Course of U.S. Trade Policy in the 1930s ,” in Michael Bordo, Claudia Goldin, and Eugene White (eds.), The Defining Moment: The Great Depression and the American Economy (Chicago: University of Chicago Press, 1998).

 

“The Reciprocity Debate in Parliament,” in Andrew Marrison (ed.), Free Trade and Its Reception, 1815-1860 (London: Routledge, 1998).

 

“ Log-Rolling and Economic Interests in the Passage of the Smoot-Hawley Tariff ,” (with Randall S. Kroszner) Carnegie-Rochester Series on Public Policy, 45 (December 1996): 173-200.

 

“ High Tech R&D Subsidies: Estimating the Effects of Sematech ,” (with Peter J. Klenow) Journal of International Economics 40 (May 1996): 323-344.

 

“ The United States in a New Global Economy? A Century’s Perspective ,” American Economic Review (Papers and Proceedings) 86 (May 1996): 41-46.

 

“Industry or Class Cleavages over Trade Policy? Evidence from the British General Election of 1923,” in Robert C. Feenstra, Gene M. Grossman, and Douglas A. Irwin (eds.), The Political Economy of Trade Policy: Essays in Honor of Jagdish Bhagwati (Cambridge: MIT Press, 1996).

 

“ Trade Politics and the Semiconductor Industry ,” in Anne O. Krueger (ed.), The Political Economy of American Trade Policy (Chicago: University of Chicago Press, 1996).

 

“ The GATT’s Contribution to Economic Recovery in Post-War Europe ,” in Barry Eichengreen (ed.), Europe's Postwar Growth (New York: Cambridge University Press, 1995).

 

“ The GATT in Historical Perspective ,” American Economic Review (Papers and Proceedings) 85 (May 1995): 323-328.

 

“ Trade Blocs, Currency Blocs, and the Reorientation of World Trade in the 1930s ,” (with Barry Eichengreen) Journal of International Economics 38 (February 1995): 1-24.

 

“ Learning-by-Doing Spillovers in the Semiconductor Industry ,” (with Peter J. Klenow) Journal of Political Economy 102 (December 1994): 1200-1227.

 

“ The Political Economy of Free Trade: Voting in the British General Election of 1906 ,” Journal of Law and Economics 37 (April 1994): 75-108.

 

“ Multilateral and Bilateral Trade Policies in the World Trading System: An Historical Perspective ,” in Jaime de Melo and Arvind Panagariya (eds.), New Dimensions in Regional Integration (New York: Cambridge University Press, 1993).

 

“ Free Trade and Protection in Nineteenth Century Britain and France Revisited: Comment on Nye ,” Journal of Economic History 53 (March 1993): 146-152.

 

“ Strategic Trade Policy and Mercantilist Trade Rivalries ,” American Economic Review (Papers and Proceedings) 82 (May 1992): 138-143.

 

“ Mercantilism as Strategic Trade Policy: The Anglo-Dutch Rivalry for the East India Trade ,” Journal of Political Economy 99 (December 1991): 1296-1314.

 

“Trade Deficit Announcements, Intervention, and the Dollar,” Economics Letters 31 (December 1989): 257-263.

 

“ Political Economy and Peel’s Repeal of the Corn Laws ,” Economics and Politics 1 (Spring 1989): 41-59.

 

“ Welfare Effects of British Free Trade: Debate and Evidence from the 1840s ,” Journal of Political Economy 96 (December 1988): 1142-1164.

 

“ The Return of the Reciprocitarians: U.S. Trade Policy Today ,” (with Jagdish N. Bhagwati) The World Economy 10 (June 1987): 109-130.