The Lerner Symmetry Theorem: Generalizations and Qualifications

15 Pages Posted: 24 May 2017

See all articles by Arnaud Costinot

Arnaud Costinot

Massachusetts Institute of Technology (MIT) - Department of Economics; University of California, San Diego (UCSD) - Department of Economics

Iván Werning

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: May 2017

Abstract

The Lerner Symmetry Theorem (Lerner, 1936) establishes the equivalence between import tariffs and export taxes in a simple neoclassical economy with two countries, two final goods, and no trade costs. In this paper we provide a number of generalizations and qualifications of this well-known result. Among other things, we show that the absence of trade deficits is neither necessary nor sufficient for Lerner Symmetry to hold. We conclude by discussing its implications for border tax adjustments.

Suggested Citation

Costinot, Arnaud and Werning, Ivan, The Lerner Symmetry Theorem: Generalizations and Qualifications (May 2017). NBER Working Paper No. w23427, Available at SSRN: https://ssrn.com/abstract=2971824

Arnaud Costinot (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Ivan Werning

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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