ESSAYS ON THE POLITICAL ECONOMY OF TRADE AND ENVIRONMENTAL POLICIES

Chapter I: In this paper, we investigate the effect of lobbying and consumer externality on the pattern of protection through non-tariff barriers to trade (NTMs) across United States manufacturing sectors. We first extend the Grossman and Helpman (1994) model, “Protection for Sale", incorporating consumer externality. Externality is intended, in our framework, as the concern of a government for consumers' safety and the environment, which should result in increased protection through standards and technical measures. In our model, externality adds to interest groups' lobbying activity in determining the increase in nontariff measures. We test the predictions of our model using a novel database on 2014 stock of NTMs. We measure political organization of industries through lobbying expenditures data, and we identify sectors where government cares the most about consumers' wellbeing using media sources. Our results suggest that both pressure from interest groups and concerns about safety and environmental issues lead to an increase in the pattern of protection across US manufacturing sectors. Chapter II: This article investigates the influence of lobbying, electoral incentives, and the ideology of U.S. state governors on environmental expenditures. A theoretical framework is presented, emphasizing that the potential impact of lobbying and messaging from interest groups on environmental policies depends on the ideology of governors. Implementing a Regression Discontinuity Design (RDD), we identify and estimate the causal effect of state governors on the level of environmental expenditures. We test whether governors tend to deviate from their own political ideology when facing pressures from polluting lobbies and electoral incentives from environmental organizations. The empirical results reveal that, when Democratic governors are in charge, environmental expenditures are, on average, higher. However, in oil-abundant states, Democratic politicians tend to allocate fewer resources to environmental preservation, suggesting that political pressure from lobbying groups matters.