A Political‐Economic Account of Global Tariffs

30 Pages Posted: 4 Jun 2015

See all articles by Kishore Gawande

Kishore Gawande

University of Texas at Austin

Pravin Krishna

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS); Brown University - Department of Economics; National Bureau of Economic Research (NBER)

Marcelo Olarreaga

University of Geneva; Centre for Economic Policy Research (CEPR)

Date Written: July 2015

Abstract

The objective of this paper is to evaluate the relative importance of three distinct factors that motivate redistributive government policy: tariff revenues, consumer welfare, and producer profits. We generalize Grossman and Helpman's (1994, American Economic Review 84: 833–850). protection‐for‐sale model by positing that government places different weights on these components of the welfare of its polity when it decides which industries to protect and to what extent. Employing tariff data from 40 countries, the predictions from this model are used to estimate these weights. The results are surprising in their range and variety. Developing countries with weak tax systems often weigh tariff revenue heavily, while more developed countries weigh producer interests the most. Very few hold consumer welfare dear.

Suggested Citation

Gawande, Kishore and Krishna, Pravin and Olarreaga, Marcelo, A Political‐Economic Account of Global Tariffs (July 2015). Economics & Politics, Vol. 27, Issue 2, pp. 204-233, 2015. Available at SSRN: https://ssrn.com/abstract=2614190 or http://dx.doi.org/10.1111/ecpo.12056

Kishore Gawande (Contact Author)

University of Texas at Austin ( email )

2317 Speedway
Austin, TX 78712
United States

Pravin Krishna

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036-1984
United States

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Marcelo Olarreaga

University of Geneva ( email )

40 Boulevard du Pont-d'Arve
Genève, CH - 1205
Switzerland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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