Why 'Buy American' is a Bad Idea but Politicians Still Like It

摘要: When the world economy was recently hit by a severe recession, governments all over reacted initiating stimulus packages. Some countries (among them, most notably, China and US) tried to put special emphasis on their home industries including “Buy local” clauses into package. By analyzing dynamics of transitory changes trade barriers as short-run response an economic downturn, we show that beggar-thy-neighbor policies do not work. We then come up with two rationales help understand why nevertheless consider protectionism be good recession: (i) lobbying domestic, non-exporting firms, (ii) relationship between vulnerability, degree openness loss aversion consumers.