Munich Personal RePEc Archive

Import Tariffs and Growth in a Model with Habits

Chen, Been-Lon and Lee, Shun-Fa (2007): Import Tariffs and Growth in a Model with Habits. Published in: International Trade and Economic Dynamics (5. January 2009): pp. 299-322.

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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.

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