Sustaining Imperfectly Credible Trade Liberalization: Do the Rate of Tariff Reduction and the Degree of Labor Mobility Matter?
AbstractImperfectly credible trade liberalization can lead to balance of payment deterioration and a subsequent reversal of the reform. Therefore, this paper examines whether the likelihood of policy reversal depends on the rate of tariff reduction or the degree of labor mobility. The analysis shows that transitory unemployment increases the likelihood of policy reversal. Furthermore, a gradual reduction in the tariff rate is found to extend the life of the liberalization episode, but does not necessarily increase the likelihood of sustained liberalization.
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Bibliographic InfoPaper provided by EconWPA in its series International Finance with number 0506007.
Length: 52 pages
Date of creation: 15 Jun 2005
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Trade Liberalization; Credibility; Gradual reform; Transitory Unemployment; Balance of Payments;
Other versions of this item:
- Robert Tatum, 2005. "Sustaining imperfectly credible trade liberalization: Do the rate of tariff reduction and the degree of labour mobility matter?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(4), pages 407-435.
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
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