When trade liberalization is self‐fulfilling: Population aging and uncertainty

When trade liberalization is self‐fulfilling: Population aging and uncertainty Expectation about future trade liberalization induces sectoral adjustment in advance. As a result, the extent of opposition to trade liberalization decreases, and liberalization becomes self‐fulfilling. We analyze this mechanism from two aspects: population aging and uncertainty. Then, we show that (1) the effect of expectation formation is non‐monotonic across ages, and (2) the effect of population aging of workforce varies depending on its driving force. In addition, we analyze uncertainty about future trade liberalization. Then, we show that (3) the mechanism cannot work due to strategic delay even under small uncertainty, but (4) a subsidy scheme can resolve this problem. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economics & Politics Wiley

When trade liberalization is self‐fulfilling: Population aging and uncertainty

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Publisher
Wiley Subscription Services, Inc., A Wiley Company
Copyright
Copyright © 2018 John Wiley & Sons Ltd
ISSN
0954-1985
eISSN
1468-0343
D.O.I.
10.1111/ecpo.12108
Publisher site
See Article on Publisher Site

Abstract

Expectation about future trade liberalization induces sectoral adjustment in advance. As a result, the extent of opposition to trade liberalization decreases, and liberalization becomes self‐fulfilling. We analyze this mechanism from two aspects: population aging and uncertainty. Then, we show that (1) the effect of expectation formation is non‐monotonic across ages, and (2) the effect of population aging of workforce varies depending on its driving force. In addition, we analyze uncertainty about future trade liberalization. Then, we show that (3) the mechanism cannot work due to strategic delay even under small uncertainty, but (4) a subsidy scheme can resolve this problem.

Journal

Economics & PoliticsWiley

Published: Jan 1, 2018

Keywords: ; ; ;

References

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