The welfare economics and the political economy of Japanese beef trade liberalization: An empirical application of new political economy theory
Jeong, Kyeong-Soo
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https://hdl.handle.net/2142/20077
Description
Title
The welfare economics and the political economy of Japanese beef trade liberalization: An empirical application of new political economy theory
Author(s)
Jeong, Kyeong-Soo
Issue Date
1995
Doctoral Committee Chair(s)
Bullock, David S.
Department of Study
Agricultural and Consumer Economics
Discipline
Agricultural and Consumer Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Agricultural
Language
eng
Abstract
Agricultural trade protection has been common in most industrialized nations for the last decades. While economic inefficiency of trade protection policy has been argued, the assertion may not hold if institutions functioning in economic equilibrium are appropriately recognized. Becker proposes that currently adopted policy tends to be more efficient than others (efficient redistribution hypothesis; ERH). Although the ERH has been a crucial assumption in many political economy models, an empirical test employing a rigorous method has not yet appeared. While the political preference function (PPF) studies have been abundant, they entail serious methodological weaknesses and their political weight estimates are often misleading.
To coherently conduct the ERH test and PPF analysis, this study modeled a integrated structure of complex Japanese beef markets. Most parameter estimates were significant, and specification and model validation tests generally suggest the good model performance. Based on consistent parameter estimates, effects of Japanese beef market tariffication and complete liberalization on interest group welfare were measured. While the results generally agree with other studies, this study alone provides statistical inference of welfare measures and sufficient evidence that marketing groups and pork producers are also major interest groups related to beef politics.
Using Bullock's rigorous test method, this study tested the ERH for Japanese beef policies. The results indicate that the ERH in 1990 is rejected, but that in 1991 cannot be rejected. Results of the ERH test for 1990 may imply the possible existence of other Pareto optimal policy.
"A least square PPF method is developed to relax the restrictive assumptions in the previous PPF studies. Using the nonparametric bootstrap method, standard errors and bootstrap confidence intervals of PPF weights were estimated. Large magnitudes and mixed signs of PPF weights along with large standard errors and confidence intervals strongly indicate that the PPF weights are seriously biased and not informative. Overall, the implications of these results are grave for past PPF studies which assumed that the number of policy instruments exactly equaled the number of interest groups minus one, and simply used ""point estimate"" PPF weights to draw inferences about the revealed political powers of interest groups."
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