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Working Paper
Tariffs and the Macroeconomy: Evidence from the USA
This paper examines the macroeconomic impact of tariffs. The effects of unilateral tariff changes are reviewed in a variety of theoretical models. Three different sets of data are consistent with the hypothesis that tariff rates have no significant effect on a system consisting of the real exchange rate, the real trade balance, and real output (both foreign and domestic) .
Journal Article
Input tariffs as a way to deal with dumping
The General Agreement on Tariffs and Trade (GATT) has significantly reduced the use of tariffs as barriers to international trade in todays marketplace. The existence of antidumping legislation, however, provides American industry with a method of procuring protection when the pressures of international competition become oppressive. Many American companies have taken advantage of the legislation and claimed injury at the hands of unfair competition from abroad, often winning the imposition of punitive duties on competing imports as compensation for previous underpricing. This article uses an ...
Journal Article
Policy update : CAFTA to have mixed effects on region's firms
Journal Article
Free trade and tariffs—an uneasy mix
When U.S. steel corporations began declaring bankruptcy and laying off thousands of workers, tariffs on foreign steel seemed a reasonable way of preventing further damage to the industry. But why do most economists favor free trade?
Working Paper
Self-employment in the global economy
This paper studies the eff ects of foreign competition on self-employment levels. We begin by pointing out a previously unknown fact: the greater the exposure to foreign competition, the smaller the fraction of self-employed people. This fact holds across very different countries, across relatively similar countries like European Union members, and across industries within the United States. We develop a model where heterogeneous agents select themselves into being either employees or self-employed in the spirit of Lucas (1978). This, in turn, translates into intra-industry firm heterogeneity ...
Working Paper
Multilateralism and the endogenous formation of PTAs
This paper examines the interaction between preferential trade agreements (PTAs) and multilateral tariff reduction in a model of imperfect competition. A growing literature finds that the formation of PTAs alters the incentives for and the sustainability of multilateral tariff reduction. We show that the causation is not one-sided -- multilateral tariff reduction also affects the formation of PTAs. Specifically, tariff reduction enhances the incentives to form a PTA and increases the likelihood that it is self-enforcing. Thus, each round of multilateral tariff reduction should lead to a new ...
Journal Article
Classical and neoclassical roots of the theory of optimum tariffs
Despite their image as free traders, six leading British classical and neoclassical economists formulated a valid theoretical argument for tariffs. They showed that a suitably small tariff could, under certain conditions, benefit the levying country by improving its terms of trade. They also stressed the insuperable practical difficulties of implementing such optimum tariffs. These difficulties plus the likelihood of foreign retaliation convinced them that free trade was the best policy after all.
Working Paper
The asymmetric effects of tariffs on intra-firm trade and offshoring decisions
This paper studies the effects of tariffs on intra-firm trade. Building on the Antrs and Helpman (2004) North-South theoretical framework, I show that higher Northern tariffs reduce the incentives for outsourcing and offshoring, while higher Southern tariffs have the opposite effects. I also show that increased offshoring and outsourcing imply an increase in the ratio of Northern intra-firm imports to total imports, which is an empirically testable prediction. Using a highly disaggregated dataset of U.S. (the North) imports and relevant tariffs, I find robust evidence to support the model's ...
Working Paper
International duopoly with tariffs
This paper analyzes the effects of a tariff on price-setting duopolists who cannot segment geographically distinct markets; hence, commercial policy has effects in domestic and foreign markets. Although each firm's payoff function is discontinuous, there is a unique equilibrium for an arbitrary tariff. We find that a tariff serves to increase the profits of both the domestic and foreign producer. Moreover, the profits of both firms rise monotonically with the tariff.