The Macroeconomic Effects of Trade Tariffs

The Macroeconomic Effects of Trade Tariffs PDF

Author: Jesper Lindé

Publisher: International Monetary Fund

Published: 2017-07-07

Total Pages: 54

ISBN-13: 1484306112

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We study the robustness of the Lerner symmetry result in an open economy New Keynesian model with price rigidities. While the Lerner symmetry result of no real effects of a combined import tariff and export subsidy holds up approximately for a number of alternative assumptions, we obtain quantitatively important long-term deviations under complete international asset markets. Direct pass-through of tariffs and subsidies to prices and slow exchange rate adjustment can also generate significant short-term deviations from Lerner. Finally, we quantify the macroeconomic costs of a trade war and find that they can be substantial, with permanently lower income and trade volumes. However, a fully symmetric retaliation to a unilaterally imposed border adjustment tax can prevent any real or nominal effects.

Macroeconomic Consequences of Tariffs

Macroeconomic Consequences of Tariffs PDF

Author: Davide Furceri

Publisher: International Monetary Fund

Published: 2019-01-15

Total Pages: 57

ISBN-13: 1484390067

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We study the macroeconomic consequences of tariffs. We estimate impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963-2014. We find that tariff increases lead, in the medium term, to economically and statistically significant declines in domestic output and productivity. Tariff increases also result in more unemployment, higher inequality, and real exchange rate appreciation, but only small effects on the trade balance. The effects on output and productivity tend to be magnified when tariffs rise during expansions, for advanced economies, and when tariffs go up, not down. Our results are robust to a large number of perturbations to our methodology, and we complement our analysis with industry-level data.

The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty

The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty PDF

Author: Lukas Boer

Publisher: International Monetary Fund

Published: 2024-01-19

Total Pages: 76

ISBN-13:

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We estimate the macroeconomic effects of import tariffs and trade policy uncertainty in the United States, combining theory-consistent and narrative sign restrictions in Bayesian SVARs. We find mostly adverse consequences of protectionism, in aggregate and across sectors and regions. Tariff shocks are more important than trade policy uncertainty shocks. Tariff shocks depress trade, investment, and output persistently. The general equilibrium import elasticity is –0.8. Historically, NAFTA/WTO raised output by 1-3% for twenty years. Undoing the 2018/19 measures would raise output by 4% over three years. The findings imply higher gains of trade than partial equilibrium or static trade models.

Macroeconomic Consequences of Tariffs

Macroeconomic Consequences of Tariffs PDF

Author: Davide Furceri

Publisher:

Published: 2018

Total Pages: 54

ISBN-13:

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We study the macroeconomic consequences of tariffs. We estimate impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963-2014. We find that tariff increases lead, in the medium term, to economically and statistically significant declines in domestic output and productivity. Tariff increases also result in more unemployment, higher inequality, and real exchange rate appreciation, but only small effects on the trade balance. The effects on output and productivity tend to be magnified when tariffs rise during expansions, for advanced economies, and when tariffs go up, not down. Our results are robust to a large number of perturbations to our methodology, and we complement our analysis with industry-level data.

The Economics of Trade Protection

The Economics of Trade Protection PDF

Author: Neil Vousden

Publisher: Cambridge University Press

Published: 1990-08-31

Total Pages: 328

ISBN-13: 9780521346696

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Over the past two decades there has been a gradual but fundamental change in the nature of trade protection. Even as international negotiation has succeeded in reducing tariffs to low levels, national governments have resorted to a range of increasingly intricate policies to protect their domestic industries from foreign competition. Direct quantitative restrictions on international trade have become particularly widespread. Such nontariff barriers often have very different effects from tariffs and require careful analysis in their own right. This book presents a systematic overview of the modern theory of trade protection. The material in the book divides naturally into four sections. The first section covers trade restrictions in competitive markets, the second trade restrictions and imperfect competition, the third the political economy of trade protection, and the fourth the theory of policy reform. The presentation makes extensive use of diagrams, with the more difficult mathematics included in six appendixes.

Understanding Tariffs and Trade Barriers

Understanding Tariffs and Trade Barriers PDF

Author: Avery Elizabeth Hurt

Publisher: Cavendish Square Publishing, LLC

Published: 2019-07-15

Total Pages: 80

ISBN-13: 1502646129

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A renegotiation of NAFTA and a trade war with China have kept tariffs and trade agreements in the news in the early twenty-first century. Tariffs, trade barriers, and the potential consequences of both are complex. This book presents a difficult subject in a straightforward and interesting manner. The use of historical and cultural tidbits, such as how the press ridiculed the embargo of 1870 by referring to it as "O grab me!" which is embargo spelled backward, will delight readers. They'll learn how South Carolina threatened to secede from the Union over tariffs in 1832, almost thirty years before it actually did secede. A discussion of the theory and history of tariffs and trade barriers puts the concept in context, while recent examples illuminate how they work in practice.

Trade Policy Implications of a Changing World: Tariffs and Import Market Power

Trade Policy Implications of a Changing World: Tariffs and Import Market Power PDF

Author: Adam Jakubik

Publisher: International Monetary Fund

Published: 2023-01-13

Total Pages: 20

ISBN-13:

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Economic theory suggests that countries’ tariff commitments in trade agreements reflect their import market power at the time of negotiations. However, as countries grow, their market power in different sectors can change in unforeseen ways and their commitments may no longer reflect changed economic conditions. Using a newly built dataset of pre-Uruguay Round applied tariffs and relying on the theoretical framework of the terms-of-trade motive for trade agreements, we estimate hypothetical tariff commitments under current levels of market power and compare them with actual tariff commitments. We find that lower tariff commitments required to reflect current economic conditions would amount to a reduction in annual tariff costs of up to $26.4 billion – equivalent to nearly 10% of global tariff costs. Our results reveal substantial heterogeneity between countries and sectors. The sectors with the largest potential tariff cost reductions are vehicles (HS 87) and machinery and appliances (HS 84-85). Product-level tariff reductions would range from 0 to 18.5 percentage points and are on average largest for China. In the past, the GATT/WTO system has updated tariff commitments through periodic rounds of negotiations, and our findings support the revival of the WTO's negotiation function in this area.

Global Tariff War

Global Tariff War PDF

Author: Ramesh Chandra Das

Publisher: Emerald Group Publishing

Published: 2021-03-09

Total Pages: 285

ISBN-13: 1800713169

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Global Tariff War: Economic, Political and Social Implications traces the impacts that global tariff wars in international trade can have on the growth of national economies. Offering a range of perspectives from developing economies, this collection presents a unique insight into this complex area of geo-political and economic practice.

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