Testing the Theory of Trade Policy: Evidence from the Abrupt End of the Multifiber Arrangement

James Harrigan; Geoffrey Barrows

doi:10.1162/rest.91.2.282

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Testing the Theory of Trade Policy: Evidence from the Abrupt End of the Multifiber Arrangement

James Harrigan¹; Geoffrey Barrows²

¹ University of Virginia · ² University of California, Berkeley

The Review of Economics and Statistics 2009

Quota restrictions on United States imports of apparel and textiles under the multifiber arrangement (MFA) ended abruptly in January 2005. This change in policy was large, predetermined, and fully anticipated, making it an ideal natural experiment for testing the theory of trade policy. Prices of quota-constrained categories from China fell by 38% in 2005, with smaller declines from other exporters. Prices in unconstrained categories from all countries changed little. We also find substantial quality downgrading in imports from China in previously constrained categories. The annual cost of the MFAto U.S. consumers was $63 per household.

DOI: 10.1162/rest.91.2.282
Volume: 91 (2)
Pages: 282-294
Language: en
Export: BibTeX
Sources: openalex crossref