Tariffs and Sectoral Adjustments in an Open Economy
This paper analyzes the impact of a tariff on sectoral adjustments in an economy which produces two traded consumption goods, one of which is exported, and a non-traded investment good. The importance of sectoral capital intensities is emphasized. In particular, the qualitative dynamic adjustment depends upon the relative capital intensities of the import-competing consumption good sector and the non-traded investment good sector. Sectoral labor allocation effects are analyzed and the long-run effect on aggregate capital accumulation is shown to depend upon the relative capital intensities of the import and export sectors. Temporary as well as permanent tariffs are discussed.
Document Object Identifier (DOI): 10.3386/w3315
Published: Journal of Economic Dynamics and Control, Vol. 15, No. 1, pp. 53-89, (1991) . citation courtesy of
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