Misallocation and Productivity Effects of the Smoot-Hawley Tariff
Using a newly created microeconomic archive of U.S. imports at the tariff-line level for 1930-33, we construct industry-level tariff wedges incorporating the input-output structure of U.S. economy and the heterogenous role of imports across sectors of the economy. We use these wedges to show that the average tariff rate of 46% in 1933 substantially understated the true impact of the Smoot-Hawley (SH) tariff structure, which we estimate to be equivalent to a uniform tariff rate of 70%. We use these wedges to calculate the impact of the Smoot Hawley tariffs on total factor productivity and welfare. In our benchmark parameterization, we find that tariff protection reduced TFP by 1.2% relative to free trade prior to the Smoot Hawley legislation. TFP fell by an additional 0.5% between 1930 and 1933 due to Smoot Hawley. We also conduct counterfactual policy exercises and examine the sensitivity of our results to changes in the elasticity of substitution and the import share. A doubling of the substitution elasticities yields a TFP decline of almost 5% relative to free trade, with an additional reduction due to SH of 0.4%. (Copyright: Elsevier)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 16 (2013)
Issue (Month): 1 (January)
|Contact details of provider:|| Postal: Marina Azzimonti, Department of Economics, Stonybrook University, 10 Nicolls Road, Stonybrook NY 11790 USA|
Web page: http://www.EconomicDynamics.org/red/
More information through EDIRC
|Order Information:|| Web: https://www.economicdynamics.org/subscription-information/ Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tatsuo Hatta, 1977. "A Theory of Piecemeal Policy Recommendations," Review of Economic Studies, Oxford University Press, vol. 44(1), pages 1-21.
- Orazio Attanasio & James Banks & Sarah Tanner, 1998.
"Asset Holding and Consumption Volatility,"
NBER Working Papers
6567, National Bureau of Economic Research, Inc.
- Douglas A. Irwin, 1998.
"The Smoot-Hawley Tariff: A Quantitative Assessment,"
The Review of Economics and Statistics,
MIT Press, vol. 80(2), pages 326-334, May.
- Douglas A. Irwin, 1996. "The Smoot-Hawley Tariff: A Quantitative Assessment," NBER Working Papers 5509, National Bureau of Economic Research, Inc.
- Crucini, Mario J, 1994. "Sources of Variation in Real Tariff Rates: The United States, 1900-1940," American Economic Review, American Economic Association, vol. 84(3), pages 732-743, June.
- James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012200, September.
- Raj Chetty & Adam Guren & Day Manoli & Andrea Weber, 2011.
"Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins,"
American Economic Review,
American Economic Association, vol. 101(3), pages 471-475, May.
- Chetty, Nadarajan & Weber, Andrea & Guren, Adam Michael & Day, Manoli, 2011. "Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins," Scholarly Articles 11878970, Harvard University Department of Economics.
- Andrew Atkeson & Ariel Burstein, 2010.
"Innovation, firm dynamics, and international trade,"
444, Federal Reserve Bank of Minneapolis.
- Andrew Atkeson & Ariel TomÃ¡s Burstein, 2010. "Innovation, Firm Dynamics, and International Trade," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 433-484, 06.
- Andrew Atkeson & Ariel Burstein, 2007. "Innovation, firm dynamics, and international trade," NBER Working Papers 13326, National Bureau of Economic Research, Inc.
- Andrew Atkeson & Ariel Burstein, 2007. "Innovation, Firm Dynamics, and International Trade," Levine's Working Paper Archive 122247000000001423, David K. Levine.
- Ariel Burstein & Andrew Atkeson, 2009. "Innovation, Firm Dynamics, and International Trade," 2009 Meeting Papers 186, Society for Economic Dynamics.
- Harrison, Glenn W & Rutherford, Thomas F & Tarr, David G, 1993.
"Trade Reform in the Partially Liberalized Economy of Turkey,"
World Bank Economic Review,
World Bank Group, vol. 7(2), pages 191-217, May.
- Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Trade Reform in the Partially Liberalized Economy of Turkey," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 5, pages 95-121 World Scientific Publishing Co. Pte. Ltd..
- Crucini, M.J. & Kahn, J., 1994.
"Tarrifs and Aggregate Economic Activity: Lessons from the Great Depression,"
RCER Working Papers
383, University of Rochester - Center for Economic Research (RCER).
- Crucini, Mario J. & Kahn, James, 1996. "Tariffs and aggregate economic activity: Lessons from the Great Depression," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 427-467, December.
- Costas Arkolakis & Arnaud Costinot & Andres Rodriguez-Clare, 2012.
"New Trade Models, Same Old Gains?,"
American Economic Review,
American Economic Association, vol. 102(1), pages 94-130, February.
- Costas Arkolakis & Arnaud Costinot & Andrés Rodríguez-Clare, 2009. "New Trade Models, Same Old Gains?," NBER Working Papers 15628, National Bureau of Economic Research, Inc.
- Arnaud Costinot & Andres Rodriguez-Clare & Costas Arkolakis, 2010. "New Trade Models, Same Old Gains?," 2010 Meeting Papers 433, Society for Economic Dynamics.
- Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
- Irwin, Douglas A, 1998. "Change in U.S. Tariffs: The Role of Import Prices and Commercial Policies," American Economic Review, American Economic Association, vol. 88(4), pages 1015-1026, September.
When requesting a correction, please mention this item's handle: RePEc:red:issued:12-98. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.