Brazilian endogenous trade policy: 1991-1998

Abstract

This paper presents an empirical contribution to the identification of Grossman-Helpman's "Protection for Sale" parameters model for Brazilian trade policy, based on robust estimations techniques, which means the use of instrumental variables in a 2SLS for Generalized Method of Moments and Limited Information Maximum Likelihood methods for weak instruments with corrections of size tests, in order to correct endogenous bias. The results suggest that the political economy of Brazil's trade policy is an outlier in international comparisons, as the identification of structural parameters for Protection for Sale model shows a low part of population represented by an interest group and low weight of the welfare function.