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Tariff-Index Theory

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  • Anderson, James E

Abstract

Tariff indices such as trade-weighted means, variances, and coefficients of variation are commonly used despite their lack of a theoretical foundation. This paper provides a theoretical framework for the index-number problem for tariffs. This paper shows that the Anderson and Neary (1993) trade-restrictiveness index is a function of "marginal trade-weighted moments" of the tariff schedule, higher mean and generalized variance both implying a higher TRI. In the CES case, the TRI is increasing in the trade-weighted mean and in the variance of the tariff schedule. For this special case the mean and the variance are partially legitimized. Copyright 1995 by Blackwell Publishing Ltd.

Suggested Citation

  • Anderson, James E, 1995. "Tariff-Index Theory," Review of International Economics, Wiley Blackwell, vol. 3(2), pages 156-173, June.
  • Handle: RePEc:bla:reviec:v:3:y:1995:i:2:p:156-73
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    References listed on IDEAS

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    1. James E. Anderson & J. Peter Neary, 1991. "A new approach to evaluating trade policy," Working Papers 199105, School of Economics, University College Dublin.
    2. James E. Anderson & J. Peter Neary, 1996. "A New Approach to Evaluating Trade Policy," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 107-125.
    3. Hatta, Tatsuo, 1977. "A Recommendation for a Better Tariff Structure," Econometrica, Econometric Society, vol. 45(8), pages 1859-1869, November.
    4. Anderson, James E & Neary, J Peter, 1992. "Trade Reform with Quotas, Partial Rent Retention, and Tariffs," Econometrica, Econometric Society, vol. 60(1), pages 57-76, January.
    5. Anderson, James E. & Bannister, Geoffrey, 1992. "The trade restrictiveness index : an application to Mexican agriculture," Policy Research Working Paper Series 874, The World Bank.
    6. Bertrand, Trent J & Vanek, Jaroslav, 1971. "The Theory of Tariffs, Taxes, and Subsidies: Some Aspects of the Second Best," American Economic Review, American Economic Association, pages 925-931.
    7. Tatsuo Hatta, 1977. "A Theory of Piecemeal Policy Recommendations," Review of Economic Studies, Oxford University Press, vol. 44(1), pages 1-21.
    8. Lopez, Ramon & Panagariya, Arvind, 1992. "On the Theory of Piecemeal Tariff Reform: The Case of Pure Imported Intermediate Inputs," American Economic Review, American Economic Association, pages 615-625.
    9. Fukushima, Takashi, 1979. "Tariff Structure, Nontraded Goods and Theory of Piecemeal Policy Recommendations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(2), pages 427-435, June.
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    Cited by:

    1. Feenstra, Robert C., 1995. "Estimating the effects of trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 30, pages 1553-1595 Elsevier.
    2. O'Rourke, Kevin H., 1997. "Measuring protection: a cautionary tale," Journal of Development Economics, Elsevier, pages 169-183.
    3. James E. Anderson & J. Peter Neary, 2003. "The Mercantilist Index of Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 627-649, May.
    4. J. Peter Neary, 2003. "Competitive versus Comparative Advantage," The World Economy, Wiley Blackwell, pages 457-470.
    5. Lloyd, P. J. & MacLaren, D., 2002. "Measures of trade openness using CGE analysis," Journal of Policy Modeling, Elsevier, pages 67-81.
    6. Anderson, James E. & Neary, J. Peter, 2007. "Welfare versus market access: The implications of tariff structure for tariff reform," Journal of International Economics, Elsevier, pages 187-205.
    7. Maria Cipollina & Luca Salvatici, 2008. "Measuring Protection: Mission Impossible?," Journal of Economic Surveys, Wiley Blackwell, pages 577-616.
    8. Federico, Giovanni & Vasta, Michelangelo, 2015. "What Do We Really Know About Protection Before The Great Depression: Evidence From Italy," CEPR Discussion Papers 10522, C.E.P.R. Discussion Papers.
    9. Martin, Will, 2005. "Outgrowing resource dependence theory and some recent developments," Policy Research Working Paper Series 3482, The World Bank.
    10. Anderson, James E & Bannister, Geoffrey J & Neary, J Peter, 1995. "Domestic Distortions and International Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 139-157, February.
    11. Sonali Deraniyagala & Ben Fine, 2000. "New Trade Theory Versus Old Trade Policy: A Continuing Enigma," Working Papers 102, Department of Economics, SOAS, University of London, UK.
    12. Salvatici, Luca & Carter, Colin A. & Sumner, Daniel A., 1997. "The Trade Restrictiveness Index: The Potential Contribution To Agricultural Policy Analysis," 1997 Annual meeting, July 27-30, Toronto, Canada 21028, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Anderson, James E. & Neary, J. Peter, 2007. "Welfare versus market access: The implications of tariff structure for tariff reform," Journal of International Economics, Elsevier, pages 187-205.
    14. Can Erbil, 2004. "Trade Taxes Are Expensive," International Trade 0409002, EconWPA.
    15. Kevin H. O'Rourke, 1994. "Measuring protection : a cautionary tale," Working Papers 199423, School of Economics, University College Dublin.
    16. Bond,Eric W., 1997. "Using tariff indices to evaluate preferential trading arrangements : an application to Chile," Policy Research Working Paper Series 1751, The World Bank.
    17. Christos Pantzios, 2000. "Trade Restrictiveness in the Presence of 'New' Goods," Open Economies Review, Springer, pages 93-101.
    18. James E. Anderson & J. Peter Neary, 2004. "Welfare vs. Market Access: The Implications of Tariff Structure for Tariff Reform," NBER Working Papers 10730, National Bureau of Economic Research, Inc.

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