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Tariff-Growth Nexus in the Australian Economy, 1870-2002: Is there a Paradox?

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  • Prema-Chandra Athukorala
  • Satish Chand

Abstract

This paper investigates the relationship between tariff and growth in the Australian economy over the period from 1871 to 2002. The study is motivated by the debate on the apparent 'tariff-growth paradox', a sign switch in the link between tariff rate and growth between the first and second episodes of globalization in world history, established from cross-country growth regressions. The long annual time series together with the recent developments in time series econometrics allows us to establish an unambiguous and stable negative relationship between tariff rates and economic growth. It is of course not possible to generalize from a single country case, but our results do cast significant doubts on the 'tariff-growth paradox' reported in recent cross-country studies.

Suggested Citation

  • Prema-Chandra Athukorala & Satish Chand, 2007. "Tariff-Growth Nexus in the Australian Economy, 1870-2002: Is there a Paradox?," Departmental Working Papers 2007-08, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2007-08
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    File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2007/wp-econ-2007-08.pdf
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    References listed on IDEAS

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    1. T. N. Srinivasan & Jagdish Bhagwati, 2001. "Outward-Orientation and Development: Are Revisionists Right?," Palgrave Macmillan Books, in: Deepak Lal & Richard H. Snape (ed.), Trade, Development and Political Economy, chapter 1, pages 3-26, Palgrave Macmillan.
    2. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    3. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, December.
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    Cited by:

    1. Cassette, Aurélie & Farvaque, Etienne, 2009. "Australian and American tariffs policies: do they rock or tango?," MPRA Paper 13627, University Library of Munich, Germany, revised 25 Feb 2009.
    2. Peter Llyod, 2007. "100 Years of Tariff Protection in Australia," Department of Economics - Working Papers Series 1023, The University of Melbourne.
    3. Peter Lloyd, 2011. "Free Trade And Growth In The World Economy," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 56(03), pages 291-306.
    4. Peter Lloyd & Donald MacLaren, 2007. "A Trade Restrictiveness Index of theLevel of Protection in Australian Manufacturing," Department of Economics - Working Papers Series 1024, The University of Melbourne.

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    More about this item

    Keywords

    economic growth; tariff; Australia;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania

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