Wednesday, March 27, 2013 9:52am

Trade Deals

Refusing to liberalize trade unless partner countries adopt new labor or environmental rules is a bad policy, because even if the new standards would reduce distortions on some dimensions, such a policy involves threatening to maintain large distortions in the form of restricted trade.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel
Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Disagree 6
Not clear that increasing carbon-intensive imports from, say, China would be a step closer to a less distorted allocation.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Agree 8
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 3
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 5
Bio/Vote History
         
Autor David Autor MIT Disagree 5
When countries adopt beggar-thy-neighbor trade/currency policies, bilateral trade agreements are a powerful tool for disciplining behavior
Bio/Vote History
         
Baicker Katherine Baicker Harvard No Opinion
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 3
Bio/Vote History
         
Chetty Raj Chetty Harvard Uncertain 1
Bio/Vote History
         
Chevalier Judith Chevalier Yale Uncertain 8
Measuring the social cost of the environmental distortion and the social cost of the trade distortion is hard to do definitively.
Bio/Vote History
         
Currie Janet Currie Princeton Agree 5
Bio/Vote History
         
Cutler David Cutler Harvard Disagree 6
Theory is clear that we cannot make such statements outside of the first best.
Bio/Vote History
         
Deaton Angus Deaton Princeton Uncertain 5
I see the point, but it seems impossible not to want to reserve judgment on a case by case basis.
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 4
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 9
Such a broad proclamation seems overstated. Relatedly, are the trade restraints on Iran bad on balance because of distortions?
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Uncertain 6
Theory of the Second Best suggests strongly that "it depends."
Bio/Vote History
         
Fair Ray Fair Yale Agree 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Strongly Agree 9
Bio/Vote History
         
Goldin Claudia Goldin Harvard No Opinion
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Uncertain 6
Depends on how big the distortion is in the status quo
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Agree 5
Yes but new research sez benefits of trade smaller than old view Greenhouse gases impt exception b/c global impact of climate change.
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Agree 7
Policymakers seem to think that granting the right to export to the US is a valuable privilege that comes at some cost to the US.
Bio/Vote History
         
Holmström Bengt Holmström MIT Disagree 7
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Agree 9
If there a true distortion (e.g. environmental) that needs correction, it should be addressed directly, not through distorting trade.
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 6
These arguments are often used by protectionists who use these issues to block freer trade.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 3
OK to threaten it, but losing a deal over this would be bad policy; this reasoning seems to make it much harder to reach deals.
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Agree 5
Income growth and technology transfer through free trade could actually improve environmental and labor standards.
-see background information here
Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 4
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 7
If the labor or environmental practices are bad enough, they should have primacy.
Bio/Vote History
         
Nordhaus William Nordhaus Yale Agree 5

Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Agree 9
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 2
Bio/Vote History
         
Scheinkman José Scheinkman Princeton No Opinion
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Uncertain 3
In many, perhaps most cases I would agree, but I don't see how one can argue that the trade distortion is always more important.
Bio/Vote History
         
Shin Hyun Song Shin Princeton Did Not Answer
Bio/Vote History
         
Stokey Nancy Stokey Chicago Uncertain 8
This question is to broad/vague to be meaningful. Specific instances would probably lead to different answers.
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 5
Poor question. Trade deals are negotiated. The word "refusing" is an odd choice.
Bio/Vote History
         
Udry Christopher Udry Yale Uncertain 3
Bio/Vote History
         
Zingales Luigi Zingales Chicago No Opinion
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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