Should Tariff Reductions be Announced? An Intertemporal Computable General Equilibrium Analysis

In this paper the macro and structural implications of three alternative tariff-reduction strategies are examined. Under the first strategy,which is similar to that adopted in Australia in 1973, the tariff cut is implemented without warning. The second strategy is consistent with the current approach of phasing in tariff cuts according to a previously announced schedule. Under the third strategy the tariff cut is implemented several years after it is announced. We find that the long-run effects of the alternative tariff reduction strategies are similar, but that the adjustment paths are not. Our results suggest that if tariffs are to be reduced then it is preferable to implement the policy without warning. The results emphasise the point that the sooner tariffs are reduced the soonerwill the allocative efficiency gains from doing so be realised.

Issue Date:
Aug 01 1997
Publication Type:
Working or Discussion Paper
Record Identifier:
Total Pages:
JEL Codes:
D58; C68; E27; F13
Series Statement:
Preliminary Working Paper No. OP-88

 Record created 2018-01-05, last modified 2018-01-22

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