Cyclical Dumping and U.S. Antidumping Protection: 1980-2001 (REVISED, January 2011)

In this paper, the author tests the theory that weak economic conditions in a foreign economy cause cyclical dumping, i.e., the temporary sale of products in a trading partner's economy at a price below average total cost. Although the author is unable to observe prices or costs directly, a novel identification strategy allows me to uncover evidence of cyclical dumping. Using country-specific information on foreign economic shocks in manufacturing industries, filing decisions by the U.S. industry and antidumping decisions by the U.S. government, she is able to identify strong evidence of cyclical dumping. After controlling for other factors that likely drive industry filing and government decisions, the author finds that a one standard deviation fall in the growth of employment in a foreign economy's manufacturing industry quadruples the joint probability that the U.S. industry will file an antidumping petition and the U.S. government will impose a preliminary (temporary) antidumping measure. Further, a one standard deviation fall in foreign employment growth more than doubles the joint probability that a petition will be filed and a final (longlasting) antidumping measure will be imposed.