infinite future. In this paper I analyze the setting of tariffs in a two-country model taking account of adjustment processes … induces policy makers with a short planning horizon to set lower tariffs because it enhances the short run boom following a … cut in tariffs. Monetary policy that aggressively fights deviations from its inflation target leads to even lower tariffs. …

This paper shows that the outcome of trade wars for tariffs and welfare will be affected by the monetary policy regime …, trade wars are relatively mild, with low equilibrium tariffs and small welfare costs. Discretionary monetary policies imply … much higher tariffs, high inflation rates, and substantially larger welfare costs. We quantify the effects of a global …