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Macroeconomic Consequences of Tariffs
Author:
Davide Furcerinull

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Mrs. Swarnali A Hannan
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Mr. Jonathan David Ostry
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Mr. Andrew K. Rosenull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2019: Issue 009
Language:
English
Publication Date:
15 Jan 2019
DOI:
https://doi.org/10.5089/9781484390061.001
ISBN:
9781484390061
ISSN:
1018-5941
Pages:
57
Keywords:
WP; sensitivity analysis; protection; output; productivity; unemployment; inequality; exchange rate; trade balance.; tariff change; output tariff effect; tariff increase; input tariff; tariff consequence; tariff rate; Tariffs; Trade balance; Real exchange rates; Protectionism; Global; Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We study the macroeconomic consequences of tariffs. We estimate impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963-2014. We find that tariff increases lead, in the medium term, to economically and statistically significant declines in domestic output and productivity. Tariff increases also result in more unemployment, higher inequality, and real exchange rate appreciation, but only small effects on the trade balance. The effects on output and productivity tend to be magnified when tariffs rise during expansions, for advanced economies, and when tariffs go up, not down. Our results are robust to a large number of perturbations to our methodology, and we complement our analysis with industry-level data.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2019: Issue 009