Economics Dictionary of ArgumentsHome
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| Tariff impacts: Tariffs are taxes on imported goods. Their impacts include Higher prices for consumers and businesses using imported inputs; Reduced imports and potentially lower overall trade volume; Protection for domestic industries, but potentially making them less efficient; Risk of retaliatory tariffs from other countries, harming exports; Can lead to lower output, productivity, and increased unemployment in the long run. See also Tariffs, Tariff responsivity, Tariff history, Trade policy._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Jonathan D. Ostry on Tariff Impacts - Dictionary of Arguments
Ostry I 1 Tariff Impacts/Furceri/Hannan/Ostry/Rose: We estimate* impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963-2014. Productivity: We find that tariff increases lead, in the medium term, to economically and statistically significant declines in domestic output and productivity. >Impulse response functions. Unemployment: Tariff increases also result in more unemployment, higher inequality, and real exchange rate appreciation, but only small effects on the trade balance. The effects on output and productivity tend to be magnified when tariffs rise during expansions, for advanced economies, and when tariffs go up, not down. Ostry I 14 [Our] results* (…) suggest that a one standard deviation (or 3.6 percentage point) tariff increase leads to a decrease in output of about .4% five years later. We consider this effect to be plausibly sized and economically significant; it is also significantly different from zero in a statistical sense. Why does output fall after a tariff increase? (…) a key channel is the statistically and economically significant decrease in labor productivity, which cumulates to about .9% after five years. Both these key findings make eminent sense; the wasteful effects of protectionism eventually lead to a meaningful reduction in the efficiency with which labor is used, and thus output.(1) Ostry I 28 Productivity: Our results* suggest that tariff increases have an adverse impact on output and productivity; these effects are economically and statistically significant. Businesss cycle: They are magnified when tariffs are used during expansions, for advanced economies, and when tariffs go up. Unemployment: We also find that that tariff increases lead to more unemployment and higher inequality, further adding to the deadweight losses of tariffs. Trade balance: Tariffs have only small effects on the trade balance though, in part because they induce offsetting exchange rate appreciations. >Exchange rates, >Currency. Protectionism: Finally, protectionism also leads to a decline in consumption; this, together with our other findings, suggests that tariffs are bad for welfare. >Protectionism, >Welfare. * Davide Furceri, Swarnali A. Hannan, Jonathan D. Ostry, and Andrew K. Rose. (2019). Macroeconomic Consequences of Tariffs. IMF Working Paper. WP/19/9. International Monetary Fund. 1. Employment increases by about 0.5 percent but the effect is not statistically significant._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Ostry I Jonathan D. Ostry Davide Furceri Andrew K. Rose, Macroeconomic Consequences of Tariffs. IMF Working Paper. WP/19/9.International Monetary Fund. Washington, D.C. 2019 |
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