The Effect of Tariffs on Imports: A Sector-Wise Analysis of Indonesia in 2001-2012

Ardiansyah Romadhon, Yutaka Ito, Keisuke Kawata and Yuichiro Yoshida
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Ardiansyah Romadhon: Graduate School for International Development and Cooperation, Hiroshima University

No 4-4, IDEC DP2 Series from Hiroshima University, Graduate School for International Development and Cooperation (IDEC)

Abstract: This paper examines the validity of the commonly accepted paradigm that tariffs discourage imports in Indonesia. Specifically, this paper investigates the effect of tariffs on imports by industry using six-digit sectoral trade data for the 2001-2012 period. We also measure the welfare cost of a marginal change in tariff rates in each industry using Harberger's approach. The results show that tariffs negatively affect only certain industries, such as chemical, stone/glass, and metals, but not other industries. The findings demonstrate that in these three industries, the welfare gain from a 1% decrease in the 2012 tariff rate amounts to approximately 3% of tariff revenue.

Keywords: Tariff; Indonesian import; Harberger's approach (search for similar items in EconPapers)
Pages: 8 pages
Date: 2014-08
New Economics Papers: this item is included in nep-int and nep-sea
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