Kishore Gawande

Is Protection for Sale? Evidence on the Grossman-Helpman Theory of Endogenous Protection

Grossman and Helpman (1994) present a theory of endogenous protection by explicitly modeling government-industry interactions for which mere black-box models previously existed. They obtain a Ramsey pricing-type solution to the provision of protection which emphasizes the role of inverse import penetration ratios and import elasticities. On the lobbying side, the model makes predictions about lobbying competition and lobbying spending according to deadweight costs from protection. The model not only makes for richer theory in terms of rigor and elegance, but its predictions are directly testable. Whether the Grossman-Helman model stands up to real-world data is investigated in this paper. Predictions from both the protection side and lobbying side are tested using cross-sectional U.S. nontariff barrier data. We also compare the second-generation Grossman-Helpman model with a more traditional specification. Our results call for serious consideration of this model in the political economy literature.

Foreign Lobbies and Us Trade Policy

In popular discussion, much has been made of the susceptibility of government policies to lobbying by foreignersthe general presumption being that this is harmful to the home economy. However, in a trade policy context this may not be the case. If the policy outcome absent any foreign lobbying is characterized by welfare-reducing trade barriers, foreign lobbying may reduce such barriers and possibly raise welfare. Using a new data set on foreign political activity in the United States, this paper investigates this question empirically. Tariffs and nontariff barriers are both found to be negatively related with foreign lobbying activity.

A META-ANALYSIS OF ENVIRONMENTAL KUZNETS CURVE STUDIES

An understanding of the empirical relationship between income and environmental quality is evolving through recent studies investigating the Environmental Kuznets Curve (EKC). The EKC represents an inverted-U relationship between income and environmental degradation. However, studies may employ different methods, evaluate different environmental indicators, and use different data, resulting in a broad spectrum of findings and leading to sometimes conflicting interpretations. The purpose of this paper is to synthesize the results of existing EKC findings by conducting a statistical meta-analysis, and to predict new income turning points (ITP). Results indicate how both methodological choices and pollutant types affect ITPs. (JEL Q20).

Lobbying and Agricultural Trade Policy in the United States

The authors study whether political campaign contributions influence agricultural protection in the United States in the manner suggested by the political economy model of Grossman and Helpman (1994). This is the first attempt to test this model using agricultural data. The authors test the model using a detailed cross-sectional data set of agricultural protection, subsidies, and political action committee (PAC) contributions in the late 1990s. The model is qualitatively affirmed by the data. They make a novel attempt to solve a puzzle about the models quantitative implications, also found in recent studies. This solution makes the simple model consistent with the complicated decisionmaking process in real world government. The results imply the underpinnings of a political economy equilibrium that will be hard to dislodge.

A consumption-based theory of the environmental Kuznets curve

Abstract Most theories about the inverted-U relationship between pollution and income, termed the environmental Kuznets curve (EKC), are production-side theories emphasizing pollution and abatement technologies. Production-side theories are implicitly based on the assumption of low factor mobility, and the absence of pollution as a variable in the utility function. Both assumptions are called into question by the empirical evidence of EKCs for (i) pollutants that are long-lived and not easily shiftable and (ii) regional cross-sections with free labor mobility. Hazardous waste sites are a prime example. This paper develops a stylized model of the EKC based on perfect mobility of households and labor. It represents the first attempt at developing a consumption-side model of the EKC.

Generated regressors in linear and nonlinear models

Abstract The need to use estimates from separate studies as regressors often arises. Such regressors need to be modelled as variables measured with error. We demonstrate the use of generated regressors in linear and nonlinear models that arise from the predictions in Grossman and Helpman (American Economic Review, 1994, 84 (4), 833–850) and Grossman and Helpman (Journal of Political Economy, 1995, 103, 675–708).

A risk-based environmental Kuznets curve for US hazardous waste sites

The Environmental Kuznets Curve (EKC) hypothesis is investigated for US hazardous waste sites. Where past studies have typically focused on cross-country analyses of conventional air and water pollutants, here, US county level data and assessed risk is used as the measure of environmental degradation.

Testing the inverted-U hypothesis for US hazardous waste: An application of the generalized gamma model

Abstract Using cross-sectional US county data, we demonstrate the inverted-U relationship between hazardous waste and per capita income. We use the generalized gamma model and two separate dependent variables: (1) tons of hazardous waste scaled by waste generators; and (2) total hazardous waste sites scaled by manufacturing establishments.

Internal migration and the environmental Kuznets curve for US hazardous waste sites

Abstract In the recent special issue of Ecological Economics devoted to the environmental Kuznets curve (EKC) hypothesis, Rothman speculates that: “what appear to be improvements in environmental quality may in reality be indicators of increased ability of consumers in wealthy nations to distance themselves from the environmental degradation associated with their consumption” (Rothman, D., 1998. Environmental Kuznets curves – real progress or passing the buck?: a case for consumption-based approaches. Ecol. Econ. 25, 178). Consistent with Rothman’s general hypothesis of ‘distancing’ as a possible source of EKC results, this empirical study advances and tests a line of argument in which internal migration plays a central explanatory role for an observed EKC for US hazardous waste sites. Two specific hypotheses tested are: (i) proximity to hazardous waste site build-up emerges as a factor in the migration decisions of individuals as per capita income increases beyond a threshold level; and (ii) the level of income at which the EKC turns downwards is equal to the threshold level of income in (i). Results provide evidence that migration is a contributing factor to the observed EKC.

Comparing Theories Of Endogenous Protection: Bayesian Comparison Of Tobit Models Using Gibbs Sampling Output

Bayesian inference and model comparisons are easily performed quite accurately using Gibbs sampling, even if (1) the likelihood is analytically intractable and (2) nonstandard prior probability density functions (pdfs) are required. In this study Bayesian model comparisons are performed among five competing theories of endogenous protection. Tariff and nontariff barrier data from 1983 between the United States and five OECD partner countries-Japan, France, Germany, Italy, and the United Kingdom-are used in the analysis. Posterior odds based on two priors show special-interest models to be more likely than other models in determining U.S. protection.