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- W2313883679 abstract "This paper examines the macroeconomic dynamics of tariffs. The adverse microeconomic effects of tariffs have been exhaustively discussed in the international trade literature. However, there are still some debate and discussion on the effects of tariffs on the macroeconomy. In the mainstream open economy macroeconomics literature, it is argued that the impact of imposing a tariff is likely to be contractionary under flexible exchange rates.1 This view, however, has been challenged first by the Cambridge Economic Policy Group (Cripps and Godley [3]) and more recently by Ford and Sen [7]. Given the fact that commercial policies have recently returned to playing a more central role in policy debates, this then leads to a revival of interest in the effects of tariffs on macroeconomic aggregates. One important drawback of the analyses in the literature is that they all assume that the domestic economy faces a given world price of imports, i.e., they focus exclusively on small open economies, with virtually no attention being devoted to two-country models.2 It is surely a question of relevance to examine the cross-country impact of protection. Although considerable effort has been devoted to examine the international transmission of fiscal and monetary policies recently (Corden and Turnovsky [2]; Svensson and van Wijnbergen [13]), little has been done on commercial policies in a two-country framework.3 It is our intention, therefore, to relax the small-country assumption to study the transmission effect of tariffs. In this paper, we discuss how likely a tariff will be beggar-thy-neighbor. Our main concern is the dynamic effects of a tariff on domestic and foreign aggregates. We pay special attention to the distinction between anticipated and unanticipated permanent tariff changes.4 The case of a temporary tariff is also examined. The analysis is conducted in a modified two-country Mun-" @default.
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- W2313883679 date "1995-04-01" @default.
- W2313883679 modified "2023-10-17" @default.
- W2313883679 title "The Macroeconomic Dynamics of Tariffs: A Symmetric Two-Country Analysis" @default.
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- W2313883679 doi "https://doi.org/10.2307/1060737" @default.
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