Anti-Dumping Duties and Macroeconomic Dynamics in a Fixed Exchange Rate Regime

This paper uses New Open Economy Macroeconomics with micro-foundation as an analytical framework integrates the characteristics of imperfect competition market and anti-dumping behavior into the two country (home country and foreign country) model. The goal is to discuss the dynamic effect on different macroeconomic variables (e.g. consumption, output, price) if the home country executes anti-dumping duties when foreign countries engage in dumping behaviors. Through theoretical inference and simulation analysis, this paper discovers that when the dumping margin is lower, the consumption and output will show the phenomenon of mis-adjustment, and the price will appear to be undershooting by an anti-dumping duty shock. When the dumping margin is higher, consumption will present undershooting, the output will appear to be overshooting, and the price will present mis-adjusting or undershooting by an anti-dumping duty shock