TARIFFS AND TRADE FLUCTUATIONS - DOES PROTECTIONISM MATTER AS MUCH ASWE THINK

Despite the widespread assumption that tariffs reduce trade volume in the short term, it is conceivable that long-term expansion and contrac tions in trade actually drive tariff levels. A Granger causality analy sis performed on British, U.S., French, German, Japanese, and a system atic aggregate data on GDP-tariff levels encompassing the 1854-1990 pe riod finds mixed support for both the short-and long-term interpretati ons. In general, the antecedence of trade on protectionism predominate s over the antecedence of protectionism on trade. One implication is t hat the long-term context should not be ignored in analyzing short-ter m dynamics.