Publication

This paper examines the 'buy local' clauses included by some countries in their stimulus packages as a reaction to the economic recession. By analyzing the dynamics of transitory changes of trade barriers as a short-run response to an economic downturn, the authors show that beggar-thy-neighbor policy does not work. They then come up with two rationales that help to understand why countries nevertheless consider protectionism to be a good response to a recession: (i) the relationship between vulnerability and the degree of openness to trading partner countries, and (ii) the lobbying of domestic, non-exporting firms.