Conconi, Paola and DeRemer, David R. and Kirchsteiger, Georg and Trimarchi, Lorenzo and Zanardi, Maurizio (2017) Suspiciously timed trade disputes. Journal of International Economics, 105. pp. 57-76. ISSN 0022-1996
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Abstract
This paper shows that electoral incentives crucially affect the initiation of trade disputes. Focusing on WTO disputes filed by the United States during the 1995-2014 period, we find that U.S. presidents are more likely to initiate a dispute in the year preceding their re-election. Moreover, U.S. trade disputes are more likely to involve industries that are important in swing states. To explain these regularities, we develop a theoretical model in which re-election motives can lead an incumbent politician to file trade disputes to appeal to voters motivated by reciprocity.