Sustaining imperfectly credible trade liberalization: Do the rate of tariff reduction and the degree of labour mobility matter?

Robert Tatum ()

Journal of International Trade & Economic Development, 2005, vol. 14, issue 4, pages 407-435

Abstract: Imperfectly credible trade liberalization can lead to balance of payment deterioration and a subsequent reversal of the reform. Therefore, this paper examines whether the likelihood of policy reversal depends on the rate of tariff reduction or the degree of labour mobility. The analysis shows that transitory unemployment increases the likelihood of policy reversal. Furthermore, a gradual reduction in the tariff rate is found to extend the life of the liberalization episode, but does not necessarily increase the likelihood of sustained liberalization.

Keywords: Liberalization; credibility; unemployment; payments deficits (search for similar items in EconPapers)
Date: 2005
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Working Paper: Sustaining Imperfectly Credible Trade Liberalization: Do the Rate of Tariff Reduction and the Degree of Labor Mobility Matter? (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:taf:jitecd:v:14:y:2005:i:4:p:407-435

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