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Import Tariffs and Growth in a Model with Habits

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  • Chen, Been-Lon
  • Lee, Shun-Fa

Abstract

This paper studies the relationship between tariffs and economic growth in a two-country AK growth model. We find that a sufficiently higher tariff can increase or decrease economic growth, which depends on the levels of productivity coefficients in both countries. Moreover, the Ricardian theorem of comparative advantage holds in the long-run equilibrium and local indeterminacy emerges in the case of incomplete specialization under milder conditions compared with conventional literature.

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File URL: http://mpra.ub.uni-muenchen.de/27667/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27667.

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Date of creation: 01 Sep 2007
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Handle: RePEc:pra:mprapa:27667

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Keywords: AK growth model; two-country; tariffs; growth; indeterminacy;

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References

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  1. Osang, Thomas & Pereira, Alfredo, 1996. "Import tariffs and growth in a small open economy," Journal of Public Economics, Elsevier, vol. 60(1), pages 45-71, April.
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Cited by:
  1. Lee, Shun-Fa, 2010. "Tariff, Growth, and Welfare," MPRA Paper 27486, University Library of Munich, Germany.

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