An Empirical Inquiry into the Role of Sectoral Diversification in Exchange Rate Regime Choice

In Journal by admin

 M.T. Chowdhury, P. Bhattacharya, D.Mallick and M.Ulubasoglu, European Economic Review, April 2014, v. 67, pp. 210-227.

Using Turkish industry-level data from 1983 to 1990, we find that politically organized industries receive both higher protection and promotion than unorganized ones. Tariff rates are decreasing (increasing) in the import-penetration ratio and the absolute value of the import-demand elasticity for organized (unorganized) industries. Subsidy rates are decreasing (increasing) in the output-supply elasticity for organized (unorganized) industries. The results are consistent with the predictions of the Grossman–Helpman model and its extension in this paper. The mix of protection and promotion is inversely related to the ratio of their respective marginal deadweight cost measures.

Download PDF