Are Tariffs Inflationary?
Economists universally regard tariffs to be inflationary and free trade to be deflationary, a view that this paper challenges. It is argued that while protectionism has generally created inflation in developing economies, the experience of the United States was totally different. Tariffs in the US were never associated with rising prices, and trade liberalization with declining prices. High tariffs were always followed by sharp drops in the cost of living. A theoretical model is developed to explain the deflationary effects of tariffs in the United States. Thus tariffs produce inflation only in nonmarket or dualistic developing economies, but not in advanced economies. Copyright 2001 by Blackwell Publishing Ltd.
Year of publication: |
2001
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Authors: | Batra, Ravi |
Published in: |
Review of International Economics. - Wiley Blackwell, ISSN 0965-7576. - Vol. 9.2001, 3, p. 373-82
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Publisher: |
Wiley Blackwell |
Saved in:
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