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Import Tariffs and Growth in a Model with Habits

In: International Trade and Economic Dynamics

Author

Listed:
  • Been-Lon Chen

    (Institute of Economics, Academia Sinica
    Washington University)

  • Shun-Fa Lee

    (Tamkang University)

  • Shimomura Koji

    (RIEB, Kobe University)

Abstract

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

Suggested Citation

  • Been-Lon Chen & Shun-Fa Lee & Shimomura Koji, 2009. "Import Tariffs and Growth in a Model with Habits," Springer Books, in: Takashi Kamihigashi & Laixun Zhao (ed.), International Trade and Economic Dynamics, pages 299-322, Springer.
  • Handle: RePEc:spr:sprchp:978-3-540-78676-4_22
    DOI: 10.1007/978-3-540-78676-4_22
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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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    More about this item

    Keywords

    Home Country; Time Preference; Consumption Good; Investment Good; Tariff Rate;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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