Unpacking the Long-Run Effects of Tariff Shocks: New Structural Implications from Firm Heterogeneity Models

Alan Spearot

American Economic Journal: Microeconomics, 2016, vol. 8, issue 2, 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)

JEL-codes: F12 F13 F14 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/mic.20140015
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Citations: View citations in EconPapers (35)

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