Unpacking the Long-Run Effects of Tariff Shocks: New Structural Implications from Firm Heterogeneity Models
American Economic Journal: Microeconomics
vol. 8,
no. 2, May 2016
(pp. 128-67)
Abstract
I derive a novel solution for the general equilibrium effects of tariffs that is robust to heterogeneity across industries and countries, and is a function of only aggregate trade data and country-by-industry Pareto shape parameters. Using the model to evaluate tariff shocks, I show that while most countries lose by removing observed tariffs unilaterally, India, Japan, Korea, and the United States gain by doing so, which suggests inefficient tariff discrimination. In evaluating multilateral shocks, observed tariff cuts over 1994–2000 benefit 69 percent of countries, with these benefits skewed toward developing nations. In contrast, removing all post-2000 tariffs benefit the developed. (JEL F12, F13, F14)Citation
Spearot, Alan. 2016. "Unpacking the Long-Run Effects of Tariff Shocks: New Structural Implications from Firm Heterogeneity Models." American Economic Journal: Microeconomics, 8 (2): 128-67. DOI: 10.1257/mic.20140015Additional Materials
JEL Classification
- F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 Trade Policy; International Trade Organizations
- F14 Empirical Studies of Trade
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