The Structure of Tariffs and Long-Term Growth
- (pp. 158-94)
Abstract
We show that the "skill bias" of a country's tariff structure is positively correlated with long-term per capita GDP growth. Testing for causal mechanisms, we find evidence consistent with the existence of real benefits from tariffs focused in skill-intensive industries. However, this only accounts for a quarter of the total correlation between skill-biased tariffs and growth. Turning to alternative explanations, we extend the standard Grossman-Helpman "protection-for- sale" model and show how the skill bias of tariffs can reflect the extent of domestic rent-seeking activities in the economy. We provide evidence that the remaining variation is explained by this endogeneity. (JEL D72, F13, F43, O17, O19, O24, O47)Citation
Nunn, Nathan, and Daniel Trefler. 2010. "The Structure of Tariffs and Long-Term Growth." American Economic Journal: Macroeconomics, 2 (4): 158-94. DOI: 10.1257/mac.2.4.158Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- F13 Trade Policy; International Trade Organizations
- F43 Economic Growth of Open Economies
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O19 International Linkages to Development; Role of International Organizations
- O24 Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy
- O47 Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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