Do Import Tariffs Generate Stagflationary Tendencies?
17 Pages Posted: 15 Aug 2018 Last revised: 9 Apr 2019
Date Written: August 1, 2018
The recent U.S. trade policy shift has reignited interest about the macroeconomic effects of import tariffs. This paper examines the impacts of import tariff shocks on U.S. macroeconomic performance using quarterly data from 1989-2017. Relying upon the estimation of structural VAR model with sign restrictions, the results suggest that tariff shocks on net-imported vital intermediate input, such as steel, trigger stagflationary tendencies as characterized by short-run increase in inflation and unemployment and decline in real output.
Keywords: import tariff shocks, steel, stagflation, structural VAR
JEL Classification: F1, F14, C3
Suggested Citation: Suggested Citation