The Growth and Welfare Consequences of Differential Tariffs With Endogenously-Supplied Capital and Labor

Philip L. Brock and Stephen J Turnovsky

No 4011, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the impact of differential tariffs on consumption and investment in a specific factors model of a small open economy in which capital is accumulated over time. Particular attention is devoted to the welfare aspects. highlighting the cost of the intertemporal distortions produced by protective trade policies. Several specific welfare propositions are obtained. First, tariff protection is shown to create short-run benefits but long-run costs in welfare. Secondly, the second-best policy for the two tariffs is characterized. Finally, several propositions summarizing the implications of our analysis for tariff reform are derived.

Date: 1992-03
Note: ITI IFM
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Published as Brock, Philip L. and Stephen J. Turnovsky. "The Growth And Welfare Consequences Of Differential Tariffs," International Economic Review, 1993, v34(4), 765-794.

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