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Steepest Ascent Tariff Reforms

Author

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  • Pascalis Raimondos
  • Alan D. Woodland

Abstract

This paper introduces the concept of a steepest ascent tariff reform for a small open economy. By construction, it is locally optimal in that it yields the highest gain in utility of any feasible tariff reform vector of the same length. Accordingly, it provides a convenient benchmark for the evaluation of the welfare effectiveness of other well known tariff reform rules, as e.g. the proportional and the concertina rules. We develop the properties of this tariff reform, characterize the sources of the potential welfare gains from tariff reform, use it to establish conditions under which some existing reforms are locally optimal, provide geometric illustrations and compare welfare effectiveness of reforms using numerical examples. Moreover, being a general concept, we apply it to the issue of market access and examine its implications. Overall, the paper’s contribution lies in presenting a theoretical concept where the focus is upon the size of welfare gains accruing from tariff reforms rather than simply with the direction of welfare effects that has been the concern of the literature.

Suggested Citation

  • Pascalis Raimondos & Alan D. Woodland, 2006. "Steepest Ascent Tariff Reforms," CESifo Working Paper Series 1760, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1760
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp1760.pdf
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    References listed on IDEAS

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    6. Rod Falvey & Udo Kreickemeier, 2017. "Tariff Reforms with Rigid Wages," World Scientific Book Chapters,in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 4, pages 95-116 World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. Raimondos-Møller, Pascalis & Woodland, Alan D., 2015. "Market access and welfare: Is there a conflict?," Economics Letters, Elsevier, vol. 126(C), pages 163-166.
    2. Henrik Barslund Fosse & Pascalis Raimondos‐Møller, 2012. "Reducing Tariffs According to WTO Accession Rules: The Case of Vietnam," Review of Development Economics, Wiley Blackwell, vol. 16(2), pages 331-341, May.
    3. Kreickemeier, Udo & Raimondos-Møller, Pascalis, 2008. "Tari[ff]-tax reforms and market access," Journal of Development Economics, Elsevier, vol. 87(1), pages 85-91, August.
    4. repec:eee:inecon:v:111:y:2018:i:c:p:134-142 is not listed on IDEAS

    More about this item

    Keywords

    steepest ascent tariff reforms; piecemeal tariff policy; welfare; market access; small open economy;

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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