Growth, expectations, and tariffs

Arbeitspapier

We study a many country endogenous growth model in which decisions about innovation and new investment are influenced by growth expectations. Adaptive learning dynamics determine country-specific short run transition paths. Countries differ in basic structural parameters and may impose tariffs on imports of capital goods. Numerical experiments illustrate adjustment dynamics that follow the use of tariffs. We show that countries that limit trade in capital goods can experience dynamic gains both in growth and utility and that such gains persist the longer the larger the structural advantages of the region that applies tariffs. Substantial differences in the levels of innovation, consumption, output, and utility can appear, and asymmetries in economic outcomes that were present before trade restrictions are made more severe.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 3435

Classification and Topics

• Classification: Wirtschaft ; Economic Growth of Open Economies ; Economic Integration
• Subject: endogenous growth ; expectations ; learning ; short run dynamics ; tariffs ; complementary capital goods ; Neue Wachstumstheorie ; Adaptive Erwartung ; Investitionsgut ; Zolltarif ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Honkapohja, Seppo ; Turunen-Red, Arja H. ; Woodland, Alan D.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/46469
• Last update: 10.03.2025, 11:42 AM CET