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Import Tariffs and Growth in a Model with Habits

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  • Chen, Been-Lon
  • Lee, Shun-Fa

Abstract

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

Suggested Citation

  • Chen, Been-Lon & Lee, Shun-Fa, 2007. "Import Tariffs and Growth in a Model with Habits," MPRA Paper 27667, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:27667
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    File URL: https://mpra.ub.uni-muenchen.de/27667/1/MPRA_paper_27667.pdf
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    References listed on IDEAS

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    Cited by:

    1. Lee, Shun-Fa, 2010. "Tariff, Growth, and Welfare," MPRA Paper 27486, University Library of Munich, Germany.

    More about this item

    Keywords

    AK growth model; two-country; tariffs; growth; indeterminacy;

    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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