Working paper

A new measure of aggregate trade restrictions: cyclical drivers and macro effects

In this paper, we present a new measure of aggregate trade restrictions.

Publishing date
01 June 2023
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Executive summary

This paper presents a new measure of aggregate trade restrictions (MATR) using data from the International Monetary Fund’s Annual Report on Exchange Arrangements and Exchange Restrictions. MATR is strongly correlated with existing measures of trade restrictiveness but is more comprehensive in terms of country and time coverage. It is available for an unbalanced sample of up to 157 countries during 1949-2019. We use MATR to re-examine how trade restrictiveness varies with the business cycle, and how the macroeconomy looks in the aftermath of changes in trade restrictiveness. For the sample as a whole, MATR is typically a-cyclical but this average finding is heterogeneous across income groups: aggregate trade restrictions are a-cyclical in advanced economies but are counter-cyclical in emerging market and developing economies, especially in response to increases in unemployment. As to macroeconomic effects, increases in MATR are robustly associated with declines in GDP and in labour productivity (as well as being adverse for a range of other macroeconomic indicators).

JEL Classification Numbers: F13; F15.

Keywords: empirical; protectionism; tariffs; non-tariff barriers; cycle.

The MATR data set is freely available at Helpful comments from Uri Dadush, André Sapir, Jeromin Zettelmeyer and seminar participants at Bruegel are gratefully acknowledged. Views expressed in this paper are those of the authors and should not be attributed to the IMF or other institutions with which the authors are affiliated.

About the authors

  • Julia Estefania-Flores

  • Davide Furceri

  • Swarnali A. Hannan

  • Jonathan Ostry

    Jonathan D. Ostry is a non-resident fellow at Bruegel, as well as Professor of the Practice of Economics at Georgetown University in Washington, DC; he is also a Research Fellow at the Center for Economic Policy Research in London and serves on the advisory board of the World Economic Forum's Global Risk Report in Geneva. Prior to his appointment at Georgetown, he served at the International Monetary Fund in senior roles, including as Deputy Director of the Research Department and Acting Director of the Asia and Pacific Department. Professor Ostry received his PhD in Economics from the University of Chicago, an MSc from the London School of Economics, and a BA in PPE from Oxford University.

    Professor Ostry’s recent academic and policy work has focused on the management of international capital flows; this work has been influential in bringing about a shift in the institutional position of the IMF on capital controls. Ostry has also published influential studies on the relationship between income inequality and economic growth, where his work suggests that high income inequality and a failure to sustain economic growth may be two sides of the same coin. Ostry’s work has also focused on the issue of fiscal sustainability, and in particular on the role of a country’s track record of fiscal management in determining access to international capital markets. This work is used by the main credit rating agencies for their sovereign credit rating analysis.

    Professor Ostry is a highly cited economist in scholarly journals (ranked in the top 1 percent of economists worldwide over the past ten years, according to RePEc), and his writings have featured prominently in the financial press (the Economist, the Financial Times, the New York Times, the Washington Post, the Wall Street Journal, Bloomberg, Time, Forbes, Fortune, CNBC, NPR, and the BBC). Earlier in his career, Ostry led the team at the IMF that produces its flagship publication, the World Economic Outlook, and was mission chief for Japan. His recent books include Taming the Tide of Capital Flows (MIT Press, 2018) and Confronting Inequality (Columbia University Press, 2019).

  • Andrew K. Rose

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