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The mercantilist index of trade policy

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  • James E. Anderson
  • J. Peter Neary

Abstract

We introduce an index of trade policy restrictiveness defined as the uniform tariff which maintains the same trade volume as a given tariff/quota structure. Our index overcomes the problems of the trade-weighted average tariff: it avoids substitution bias, correctly accounts for general equilibrium transfers, and takes import volume rather than welfare as benchmark. Empirical applications to international cross-section and time-series comparisons of trade policy confirm our theoretical results: trade-weighted average tariffs generally underestimate the true height of tariffs as measured by the trade-volume-equivalent index; this in turn always underestimates the welfare-equivalent index.

Suggested Citation

  • James E. Anderson & J. Peter Neary, 2001. "The mercantilist index of trade policy," Working Papers 199813, School of Economics, University College Dublin.
  • Handle: RePEc:ucn:wpaper:199813
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    File URL: http://hdl.handle.net/10197/1323
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    References listed on IDEAS

    as
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    3. J. Peter Neary, 1998. "Pitfalls in the Theory of International Trade Policy: Concertina Reforms of Tariffs, and Subsidies to High‐Technology Industries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 187-206, March.
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    7. Anderson, James E & Bannister, Geoffrey J & Neary, J Peter, 1995. "Domestic Distortions and International Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 139-157, February.
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    More about this item

    Keywords

    Tariffs; Quotas; Trade Restrictiveness Index; Trade liberalisation; International trade policy; International trade; Tariff; Restraint of trade; Commercial policy;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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