Growth, expectations and tariffs

Seppo Honkapohja, Arja H. Turunen-Red and Alan Woodland

Canadian Journal of Economics, 2016, vol. 49, issue 4, 1441-1469

Abstract: We present a growth model of international trade in which expectations about profitability and growth influence innovation and investment. Adaptive learning dynamics determine transition paths for countries with differing structural parameters. Countries limiting trade by tariffs on imports of capital goods can experience gains in growth and perceived utility for a finite time, whereas the rest of the world is adversely affected. Asymmetric gains persist longer when structural advantages of the country applying tariffs are larger. Substantial differences in levels of innovation, output and utility can appear within our asymmetric country setting.

JEL-codes: F43 (search for similar items in EconPapers)
Date: 2016
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Related works:
Journal Article: Growth, expectations and tariffs (2016)
Working Paper: Growth, Expectations, and Tariffs (2011)
Working Paper: Growth, expectations and tariffs (2011)
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