Trade, Luxury Goods and a Growth Enhancing Tariff

Arbeitspapier

This article presents a Ricardian model of trade with learning-by-doing to study the effect of barriers to trade in products with low growth potential on the long-run economic growth. The model shows that, when elasticity of demand for the product with a lower learning potential is greater than unity, a tariff imposed on this product can shift the demand toward the product with a higher learning potential, thus enhancing growth in the exporter economy. Therefore, although with some possible negative effect on the welfare in the short run, barriers for the export of natural luxury goods may be beneficial for developing economies in the long run, since they increase their incentive to develop sectors with higher growth potential.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 5943

Classification and Topics

• Classification: Wirtschaft ; Neoclassical Models of Trade ; Economic Integration ; Open Economy Macroeconomics ; One, Two, and Multisector Growth Models
• Subject: trade barriers ; luxury goods ; learning-by-doing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Azarnert, Leonid V.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/144978
• Last update: 10.03.2025, 11:42 AM CET