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.
Download (307kB) | Preview
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.
|Item Type:||MPRA Paper|
|Original Title:||Import Tariffs and Growth in a Model with Habits|
|Keywords:||AK growth model, two-country, tariffs, growth, indeterminacy|
|Subjects:||F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies
|Depositing User:||Shun-Fa Lee|
|Date Deposited:||30. Dec 2010 20:55|
|Last Modified:||18. Feb 2013 07:46|
Abel, A.B., 1990, Asset prices under habit formation and catching up with the Joneses, 1990, American Economic Review, Papers and Proceedings, 80(2), 38-42. Alonso-Carrera, J., J. Caballe and X. Raurich, 2004, Consumption externalities, habit formation and equilibrium efficiency, Scandinavian Journal of Economics 106(2), 231-51. Alonso-Carrera, J., J. Caballe and X. Raurich, 2005, Growth, habit formation, and catching-up with the Jones, European Economic Review 49, 1885-91. Alonso-Carrera, J., J. Caballe and X. Raurich, 2006, Welfare implications of the interaction between habits and consumption externalities, International Economic Review 47, 557-71. Alvarenz-Cuadrado, F., G. Monteiro and S. Turnovsky, 2004, Habit formation, catching up with the Joneses, and economic growth, Journal of Economic Growth 9, 47-80. Ben-David, D. and M. B. Loewy, (1998), Free trade, growth, and Convergence, Journal of Economic Growth, 3, 143-170. Baxter, M., 1992, Fiscal policy, specialization, and trade in the two-sector model: the returns to Ricardo?, Journal of Political Economy 100, 713-44. Boldrin, M., L. J. Christiano and J. D. M. Fisher, 2001, Habit Persistence, Asset Returns, and the Business Cycle, American Economic Review 91(1), 149-65. Campbell, J. Y. and J. H. Cochrane, 1999, By Force of Habit: A Consumption-Based Explanation of Aggregate Stock Market Behavior, Journal of Political Economy 107(2), 205-51. Carroll, C. D., J. R. Overland and D. N. Weil, 2000, Saving and Growth with Habit Formation, American Economic Review 90(3), 341-355. Chen, B.L., 2006, Multiple BGPs in a growth model with habit persistence, Journal of Money, Credit and Banking (forthcoming). Chen, B.L., K. Nishimura and Koji Shimomura, 2005, An Uzawa-Oniki-Uzawa Dynamic Two-country Model of International Trade: Back to Heckscher and Ohlin, mimeo., RIEB, Kobe University. Clements, M. A. and J. G. Williamson, (2004), “Why did the tariff-growth correlation change after 1950?” Journal of Economic Growth, 9, 5-46, 2004. Constantinides, G. M., 1990, Habit Formation: A Resolution of the Equity Premium Puzzle, Journal of Political Economy 98(3), 519-543. Dupor, B. and W.-F. Liu (2003), “Jealousy and equilibrium overconsumpiton,” American Economic Review, 423-428 Drugeon, J-P. (1998), “A model with endogenously determined cycles, discounting and growth,” Economic Theory, 12, 349-369. Easterly, W. and S. Rebelo, (1993), “Fiscal policy and economic growth,” Journal of Monetary Economics, 32, 417-458. Edwards, S. (1992), “Trade orientation, distortions and growth in developing countries,” Journal of Development Economics, 39, 31-57. Fisher, W.H. and F.X. Hof, 2000, Relative consumption, economic growth and taxation, Journal of Economics 72, 241-262. Fuhrer, J. C. and M. W. Klein, 1998, Risk habits: on risk sharing, habit formation and interpretation of international consumption correlation, NBER Working Paper No. 6735. Gali, J., 1994, Keeping up with the Joneses: consumption externalities, portfolio choice and asset prices, Journal of Money, Credit and Banking 26(1), 1-8. Grossman, G. M. and E. Helpman (1990), “Comparative advantage and long-run growth,” American Economic Review, 80, 796-815. Harrison, A. (1996), “Openness and growth: a time series, cross-country analysis for developing countries,” Journal of Development Economics, 48, 419-447. Irwin, D. A. (2002), “Interpreting the tariff-growth correlation of the late nineteenth century,” NBER Working Paper Series, No. 8739. Jones, L. E. and R. Manuelli (1990), “A conves model of equilibrium Growth,” Journal of Political Economy, 98, 1008-1037. Lee, J.-W. (1993), “International trade, distortions, and long-run economic growth,” IMF Staff Papers, 40, 299-328. Liu, W.F. and S. Turnovsky, 2005, Consumption externalities, production externalities, and long-run macroeconomic efficiency, Journal of Public Economics 89, 1097-1129. Ljungqvist, L. and H. Uhlig, 2000, Tax policy and aggregate demand management under catching up with Joneses, American Economic Review 90(3), 356-66. Nishimura and Shimomura (2006), “Indeterminacy in a dynamic two-country model,” Economic Theory, (forthcoming). Ogaki, M. and C.M. Reinhart, 1998, Measuring intertemporal substitution: The role of durable goods, Journal of Political Economy, 106, 1078-1098. O’Rourke, K. H. (2000), “Tariffs and growth in the late nineteenth century,” Economic Journal, 110, 456-483. Osang, T. and A. Pereira, (1996), “Import tariffs and growth in a small open economy,” Journal of Public Economics, 60, 45-71. Osborn, D. R., 1988, Seasonality and habit persistence in a life cycle model of consumption, Journal of Applied Econometrics 3, 255-266. Rivera-Batiz, L. A. and P. M. Romer, (1991), “International trade with endogenous technological change,” European Economic Review, 35, 971-1004. Rodriguez, F. and D. Rodrik, (2001), “Trade policy and economic growth: a skeptic’s guide to the cross-national evidence,” In Bernanke, B. S. and K. Rogoff (Eds.), NBER Macroeconomics Annual 2000. MIT Press, Cambridge. Sala-i-Martin, X.X. (1997), “I just ran two million regressions,” American Economic Review, 87, 178-183. Uzawa, H., (1968), “Time preference, the consumption function, and optimum asset holdings,” chapter 21 in J. N. Wolfe, ed., Value, Capital, and Growth. Papers in honor of Sir John Hicks, Edinburgh: University Press, 485-504. Van de Stadt, H., A. Kapteyn and S. van de Geer, 1985, The relativity of utility: evidence from panel data, Review of Economics ans Statistics 67, 179-187. Yanikkaya, H. (2003), “Trade openness and economic growth: a cross-country empirical investigation,” Journal of Development Economics, 72, 57-89. Yogo, M., 2004, “Estimating the elasticity of intertemporal substitution when instruments are weak,” Review of Economics and Statistics, 86, 797-810.