Abstract
This paper analyzes the incidence of commercial policy by simulating the effects of an import tariff in the context of a general equilibrium econometric model of the U.S. It is found that in the long run the tariff protection given to importables is mainly at the expense of exportables, rather than the nontraded goods sector. The simulations also provide the general equilibrium responses of a number of other variables to changes in commercial policy, which may be of interest from a policy perspective.
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I am indebted to R. Stephen Hale for helpful comments and efficient research assistance, and to Pat Ruth for programming assistance. For useful comments, thanks are due to Kent Kimbrough, Leonardo Leiderman, Michael Mussa, Robert Nobay, Clifford Wymer and an anonymous referee of this journal. This paper has its origins in my Ph.D. dissertation, and I would also like to acknowledge the help of my thesis committee, Jacob Frenkel (Chairman), the late Harry Johnson, Stephen Magee, and Larry Sjaastad. The views expressed herein are not necessarily those of the Reserve Bank of Australia.
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Clements, K.W. Protection and commercial policy: Experiments with a general equilibrium econometric model. Empirical Economics 4, 135–148 (1979). https://doi.org/10.1007/BF01763554
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DOI: https://doi.org/10.1007/BF01763554