Philipp Maier

Philipp Maier is the Assistant Chief for the International Studies Division in the International Department at the Bank of Canada in Ottawa, Canada. Previously, he worked as Senior Economist at De Nederlandsche Bank in Amsterdam, the Netherlands. He studied economics at the University of Saarbrücken and the University of Göttingen (both Germany), and got his Ph.D. in economics from the University of Groningen in the Netherlands.

Papers Published in World Economics:

A Wave of Protectionism?
Author: Philipp Maier

In light of the US current account deficit, pressure is high on Asian countries to revalue their currencies. The calls from some US policymakers for tariffs on imports from China have sparked fears of a world-wide surge in protectionism. This study evaluates the risk of protectionism, considering two dimensions: first, the economic effects; second, the incentives for policymakers to adopt tariffs. The study distinguishes between ‘benevolent’ policymakers-who care about long-term GDP-and ‘myopic’ policymakers, for whom short-term considerations are important. An analysis of the economic effects using the Bank of Canada’s Global Economy Model shows that the gains from import tariffs are small: import tariffs raise the price of imports and shift consumption toward domesticallyproduced goods; but they also lead to a real appreciation. This improves the terms of trade, but falling export volumes lead to a reduction in GDP in the long run. The conclusion therefore is that a ‘benevolent’ policymaker would not adopt tariffs, because of negative long-term consequences, but ‘myopic’ policymakers might be tempted to exploit short-term political gains. Given the potentially high costs of protectionist trade policies, protectionism is therefore rightly viewed as an important risk.

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