Administered protection in the United States during the 1980s : exchange rates and institutions

Abstract

The strong appreciation of the U.S. Dollar between 1980 and 1985 induced a surge in imports into the United States for a wide variety of products. This, in turn, increased the demand for trade protection. Many of these demands were satisfied via U.S. antidumping and countervail regulations, yielding ad valorem tariffs well above current average duties. Import protection can benefit not only the protection-seeker, but also those who provide relief. A principal-agent model is developed that describes the potential gains to both the regulatory agency and the legislator. Empirical results support the model specification, finding both exchange rate and political cycles.