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Optimal Tariffs; Theory and Practice

Author

Listed:
  • Ali Ibrahim
  • Arvind Subramanian
  • Luis A. Torres-Castro

Abstract

This paper examines the theory underpinning the design of optimal tariffs in a developing economy, and the experience of implementation of tariff reforms. A central issue is whether and when a case can be made for a uniform tariff structure. While theory advocates a differentiated tariff structure (except under a balance of payments objective), political economy considerations, inadequate information, and administrative convenience point to a minimally differentiated tariff structure. The experience of reform indicates that tariff structures are mainly influenced by income distribution and protection objectives. The ability to successfully reduce tariffs depends on measures taken to alleviate fiscal and balance of payments constraints.

Suggested Citation

  • Ali Ibrahim & Arvind Subramanian & Luis A. Torres-Castro, 1993. "Optimal Tariffs; Theory and Practice," IMF Working Papers 93/50, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:93/50
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    Cited by:

    1. Buch, Claudia M. & Koop, Michael J. & Schweickert, Rainer & Wolf, Hartmut, 1995. "Währungsreformen im Vergleich: monetäre Strategien in Rußland, Weißrußland, Estland und der Ukraine," Open Access Publications from Kiel Institute for the World Economy 831, Kiel Institute for the World Economy (IfW).

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