Tariffs and Employment: An Intertemporal Approach

John Fender and Chong Yip

Economic Journal, 1989, vol. 99, issue 397, 806-17

Abstract: This paper studies the effects of tariffs in a two-period, two-good, macroeconomic model. The first period is characterized by unemployment and either nominal or real wage rigidities. In the second period, all prices are flexible and markets clear. Consumer behavior is based on intertemporal optimization. The effects of a temporary and an anticipated tariff on the exchange rate and employment are derived and discussed; both fixed and flexible exchange rate regimes are considered. Some attention is also given to alternative policies as ways of increasing employment. Copyright 1989 by Royal Economic Society.

Date: 1989
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