The Macroeconomy after Tariffs

What does the macroeconomy look like in the aftermath of tariff changes This paper estimates impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963-2014. Tariff increases are associated with persistent, economically and statistically signifi...

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Bibliographic Details
Main Author: Furceri, Davide
Other Authors: Rose, Andrew K., Ostry, Jonathan D., Hannan, Swarnali A.
Format: eBook
Language:English
Published: Washington, D.C The World Bank 2021
Subjects:
Online Access:
Collection: World Bank E-Library Archive - Collection details see MPG.ReNa
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300 |a 71 pages 
653 |a Macroeconomics and Economic Growth 
653 |a Output 
653 |a Tariffs 
653 |a International Trade and Trade Rules 
653 |a Productivity 
653 |a Trade Policy 
653 |a Unemployment 
653 |a Economic Growth 
653 |a Inequality 
653 |a Trade Balance 
653 |a Exchange Rate 
653 |a International Economics and Trade 
653 |a Macroeconomic Management 
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700 1 |a Ostry, Jonathan D. 
700 1 |a Hannan, Swarnali A. 
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520 |a What does the macroeconomy look like in the aftermath of tariff changes This paper estimates impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963-2014. Tariff increases are associated with persistent, economically and statistically significant, declines in domestic output and productivity, as well as higher unemployment and inequality, real exchange rate appreciation and insignificant changes to the trade balance. Output and productivity impacts are magnified when tariffs rise during expansions and when they are imposed by more advanced or smaller (as opposed to developing or larger) economies; effects are asymmetric, being larger when tariffs go up than when they fall. While firmly establishing causality is always a challenge, the results are robust to a large number of perturbations to the baseline methodology, and hold using both macroeconomic and industry-level data