The great depression brought us the American Smoot-Hawley Tariff Act (enacted June 17, 1930). Most nations reciprocated and imposed their own trade restrictions, raised existing ones, or set quotas on foreign imports. The effect of these measures was to greatly reduce the volume of international trade: by 1932 the total value of world trade had fallen by more than half. Try the simplest open economy trade model you can write down (see chapter 14) to see if you can reproduce the effects and identify the effect on output…

The Stimulus Package (aka “the American Recovery and Reinvestment Act” passed on Tuesday February 17, 2009) has a whole new set of “Buy American” expenditure switching provisions (chapter 15)…