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The Effects of Tariffs and Real Wages on Employment in a Barro-Grossman Model of an Open Economy

In: Unemployment

Author

Listed:
  • Per-Olov Johansson

    (University of Umeå and the Royal College of Forestry)

  • Karl-Gustaf Löfgren

    (University of Umeå and the Royal College of Forestry)

Abstract

This paper deals with the effects of tariffs, changes in real wages, and devaluations on employment in a disequilibrium model of a small open economy. It is e.g. shown that the impacts of tariffs under a flexible exchange rate regime are insensi tive to the kind of disequilibrium which prevails. The introduction of tariffs will decrease total employment. Analogous problems are analyzed under a fixed exchange rate regime. We show that the introduction of tariffs is now a better remedy against unemployment. We also indicate how changes in real wages and devaluations can be used to cure short-run unemployment.

Suggested Citation

  • Per-Olov Johansson & Karl-Gustaf Löfgren, 1981. "The Effects of Tariffs and Real Wages on Employment in a Barro-Grossman Model of an Open Economy," Palgrave Macmillan Books, in: Lars Matthiessen & Steinar Strøm (ed.), Unemployment, pages 39-55, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-05966-9_4
    DOI: 10.1007/978-1-349-05966-9_4
    as

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