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Welfare Effects of British Free Trade: Debate and Evidence from the 1840s

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  • Irwin, Douglas A

Abstract

Classical economists engaged in a vigorous debate over whether Britain's tariff reductions in the 1840s should be made contingent on tariff liberalization abroad. Some, notably Robert Torrens, believed that a unilateral tariff reduction would so deteriorate British terms of trade as to outweigh efficiency gains and make the country worse off. In this paper, Britain's foreign trade elasticities are estimated for this period in a simultaneous equation model. They are used in a simple general equilibrium model that explicitly takes the terms of trade into account to assess the welfare impact of tariff reductions. The results indicate that Britain would have been made worse off from a unilateral tariff reduction. However, foreign tariff reductions mitigated the terms of trade deterioration and could easily have made Britain better off. Copyright 1988 by University of Chicago Press.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 96 (1988)
Issue (Month): 6 (December)
Pages: 1142-64

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Handle: RePEc:ucp:jpolec:v:96:y:1988:i:6:p:1142-64

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Cited by:
  1. John H. Coatsworth & Jeffrey G. Williamson, 2002. "The Roots of Latin American Protectionism: Looking Before the Great Depression," NBER Working Papers 8999, National Bureau of Economic Research, Inc.
  2. Yoshiaki Sugimoto, 2005. "Endogenous Globalization and Income Divergence," Development and Comp Systems 0503003, EconWPA.
  3. Peter H. Lindert & Jeffrey G. Williamson, 2001. "Does Globalization Make the World More Unequal?," NBER Working Papers 8228, National Bureau of Economic Research, Inc.
  4. repec:spo:wpecon:info:hdl:2441/670 is not listed on IDEAS
  5. Nicholas Crafts & C. Knick Harley, 2002. "Precocious British industrialization: a general equilibrium perspective," Economic History Working Papers 22368, London School of Economics and Political Science, Department of Economic History.
  6. Ejrnæs, Mette & Persson, Karl Gunnar, 2010. "The gains from improved market efficiency: trade before and after the transatlantic telegraph," European Review of Economic History, Cambridge University Press, vol. 14(03), pages 361-381, December.
  7. Yousef, Tarik M., 2000. "The Political Economy of Interwar Egyptian Cotton Policy," Explorations in Economic History, Elsevier, vol. 37(4), pages 301-325, October.
  8. Yoshiaki Sugimoto, 2006. "Endogenous Trade Policy: Political Struggle in the Growth Process," ISER Discussion Paper 0678, Institute of Social and Economic Research, Osaka University.
  9. Bergin, Paul R & Glick, Reuven & Taylor, Alan M, 2004. "Productivity, Tradability and the Long-Run Price Puzzle," CEPR Discussion Papers 4494, C.E.P.R. Discussion Papers.
  10. Rodney D. Ludema & Daniel E. Coates, 1998. "Unilateral Trade Liberalization as Leadership in Trade Negotiations," International Trade 9802002, EconWPA.
  11. Douglas A. Irwin, 1991. "Retrospectives: Challenges to Free Trade," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 201-208, Spring.
  12. Douglas A. Irwin, 1990. "Free trade at risk? An historical perspective," International Finance Discussion Papers 391, Board of Governors of the Federal Reserve System (U.S.).
  13. Peter H. Lindert & Jeffrey G. Williamson, 2002. "Mondialisation et inégalité : une longue histoire," Revue d’économie du développement, De Boeck Université, vol. 16(1), pages 7-41.
  14. Accominotti, Olivier & Flandreau, Marc, 2005. "Does Bilateralism Promote Trade? Nineteenth Century Liberalization Revisited," CEPR Discussion Papers 5423, C.E.P.R. Discussion Papers.
  15. Coates, Daniel E. & Ludema, Rodney D., 2001. "A theory of trade policy leadership," Journal of Development Economics, Elsevier, vol. 65(1), pages 1-29, June.
  16. Tony Ward, 2004. "The Corn Laws and English wheat prices, 1815–1846," Atlantic Economic Journal, International Atlantic Economic Society, vol. 32(3), pages 245-255, September.

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