Border Crossing: Exchange Rate Movements and the Demand for Protection

International political economy rests on issue-specific models of trade politics and exchange rate politics. The private actors we model, however, do not always respect the borders we draw around these issue areas. As I demonstrate, firms react to exchange rate movements by demanding trade protection. Consequently, we need to begin to replace issue-specific models with more general models of international political economy. This paper takes initial steps in this direction by incorporating exchange rate movements into the standard Ricardo-Viner endogenous tariff model. In this framework, exchange rate movements change the trade policy preferences of a subset of firms. Consequently, demands for protection rise as the currency strengthens and diminish as the currency weakens. I test the hypothesis using two measures of administered protection petition filings in the United States between 1974 and 2004. The empirical analysis yields robust support for the study’s principal hypothesis. 1 International political economy has developed through the formulation an