Arbeitspapier
Whom to Send to Doha? The Shortsighted Ones!
Why are empirically observed tariffs so much lower than theoretically calculated Nash-equilibrium tariffs? We argue that this gap can be narrowed by using a dynamic model instead of a static model. This approach has two advantages. (i) It allows us to take account of the transitional process after a change in tariffs. (ii) It allows us to take account of the shortsightedness of policy makers. We show that Nash-equilibrium tariffs based on a dynamic trade model are lower than Nash-equilibrium tariffs based on a static model. We also show that shortsighted politicians tend to set lower tariffs than politicians with a long planning horizon.
- Language
-
Englisch
- Bibliographic citation
-
Series: Kiel Working Paper ; No. 1695
- Classification
-
Wirtschaft
Neoclassical Models of Trade
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Trade Policy; International Trade Organizations
- Subject
-
Bubbles
fiscal theory of the price level
collateral constraints
neutrality
transversality conditions
Zolltheorie
Nash-Gleichgewicht
Zollpolitik
- Event
-
Geistige Schöpfung
- (who)
-
Larch, Mario
Lechthaler, Wolfgang
- Event
-
Veröffentlichung
- (who)
-
Kiel Institute for the World Economy (IfW)
- (where)
-
Kiel
- (when)
-
2011
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Larch, Mario
- Lechthaler, Wolfgang
- Kiel Institute for the World Economy (IfW)
Time of origin
- 2011
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