Economics Dictionary of ArgumentsHome
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| Market imperfections: Market imperfections are situations where real-world markets deviate from the ideal conditions of perfect competition. They prevent markets from allocating resources efficiently. See also Imperfect competition, Perfect competition, Competition, Markets, Trade, Free trade._____________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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IMF Working Papers on Market Imperfections - Dictionary of Arguments
Ostry I 3 Market Imperfections/Furceri/Hannan/Ostry/Rose: Discussions of market imperfections and the like are naturally microeconomic in nature. Accordingly, most analysis of trade barriers is microeconomic in nature, focusing on individual industries (see Grossman and Rogoff (1995)(1) and references therein). This makes sense. Artificial barriers to international trade have gradually fallen for most countries over the decades since the end of World War II. >Free trade, >International trade. The exceptions to this trend tend to be concentrated in individual industries, often associated with agriculture or apparel. International commercial policy tends not to be used as a macroeconomic tool, probably because of the availability of superior alternatives such as monetary and fiscal policy. >Protectionism, >Fiscal policy, >Monetary policy, >Tariffs. Ostry I 4 In addition, there are strong theoretical reasons that economists abhor the use of protectionism as a macroeconomic policy; for instance, the broad imposition of tariffs may lead to offsetting changes in exchange rates (Dornbusch, 1974(2); Edwards, 1989(3)). And while the imposition of a tariff could reduce the flow of imports, it is unlikely to change the trade balance unless it fundamentally alters the balance of saving and investment. Further, economists think that protectionist policies helped precipitate the collapse of international trade in the early 1930s, and this trade shrinkage was a plausible seed of World War II. So, while protectionism has not been much used in practice as a macroeconomic policy (especially in advanced countries), most economists also agree that it should not be used as a macroeconomic policy. Times change. Some economies have recently begun to use commercial policy, seemingly for macroeconomic objectives. So it seems an appropriate time to study what, if any, the macroeconomic consequences of tariffs have actually been in practice. Most of the predisposition of the economics profession against protectionism is based on evidence that is either a) theoretical, b) micro, or c) aggregate and dated. >Method/Ostry. 1. Grossman, Gene M., and Kenneth Rogoff, 1995, Handbook of International Economics, Volume III (Amsterdam: Elsevier Science Publishers B.V.). 2. Dornbusch, Rudiger, 1974, “Tariffs and Nontraded Goods,” Journal of International Economics, vol. 4(2), pp. 177-85. 3. Edwards, Sebastian, 1989, Real Exchange Rates, Devaluation, and Adjustment (Cambridge, Massachusetts: MIT Press)._____________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. |
IMF Working Papers 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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