An empirical investigation into the political economy of the North American Free Trade Agreement

My dissertation is a political economy analysis of the North American Free Trade Agreement. I look at the impact of PAC contributions on the NAFTA vote and on the tariff phase-out periods negotiated under the NAFTA accord.; My first essay, Lobbying the NAFTA Vote, develops and tests a theoretical model in which two opposing lobbies give contributions to an incumbent legislator in order to increase the probability that he votes for their favored position. Politicians are assumed to make their decision on the bill by maximizing a weighted sum of local constituency interests and campaign contributions. The modeling of politician interests and lobby contributions builds on the political economy models of Brock, Magee and Young and Grossman and Helpman.; The model yields a three-equation system: a voting equation to explain the yes/no vote of each politician on NAFTA, and reaction functions to explain the level of contributions of each lobby (i.e. pro and anti-NAFTA) to a politician. PACs associated with industries with over {dollar}200 million in net exports to Mexico in 1991 were classified as pro-NAFTA. PACs associated with industries with over {dollar}200 million in net imports from Mexico in 1991 and labor union PACs were classified as anti-NAFTA. The model is estimated using a procedure suggested by Nelson and Olson to estimate simultaneous systems with limited dependent variables. The voting equation is specified as a Probit equation and the contribution equations are estimated with OLS techniques.; I find that contributions from pro and anti-NAFTA PACs were statistically significant with the expected signs in the NAFTA voting equation. I also find that both pro and anti-NAFTA PACs gave more money to Democrats. This finding is consistent with the theoretical model, which predicts that the undecided representatives will get the most contributions. I argue that the majority of the undecided legislators were Democrats.; My second essay, NAFTA Tariff Phase-Outs: An Empirical Analysis , looks at the inter-industry variation in U.S. and Mexican tariff phase-out periods as agreed to in the NAFTA accord. Under NAFTA most tariffs and quantitative restrictions on trade between the U.S. and Mexico were completely removed when the treaty took effect. Many products however were placed on a phase-out schedule in which tariffs were to be gradually reduced over a period of up to 15 years.; I simultaneously estimated the U.S. and Mexican tariff phase-out schedules. (Abstract shortened by UMI.)...