The Effects of Anti-Dumping Duties in a Fixed Exchange Rate Regime

Abstract

In this paper, New Open Economy Macroeconomics with micro-foundation was served as an analytical framework to explore long-term effect of domestic antidumping tax on macroeconomic variables (e.g. consumption, output, the price, and terms of trade) in a fixed exchange rate regime while the dumping by the foreign country into the home country. With theoretical derivation and simulation analysis, we found that when the ratio of export product price selling below its domestic retail price is lower, the antidumping tax is in positive relationship with the domestic consumption, foreign consumption, world consumption, domestic and foreign price indices, while is in negative relationship with domestic output, foreign output, and terms of trade. Besides, the larger ratio of export product price selling below its domestic retail price, the larger the degree of each macroeconomic variable fluctuates.