WK7_27Sept_Ch_8_tariff

WK7_27Sept_Ch_8_tariff - Chapter 8 Analysis of Tariffs Week...

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Unformatted text preview: Chapter 8 Analysis of Tariffs Week 7 (Tuesday, 9/27/2011) Outline Definition of Tariffs and Types Positive and Normative Effects Small vs. Large Country in World Trade Graphical Analysis of Tariff Small country case Large country case Tariff Analysis: Broad Lessons The Pie Shrinks Tariffs (& other trade barriers) almost always lower the living standard of the nation imposing the tariff. Always a Better Way Whatever a tariff can do for the nation, a different policy can do better. Someone Definitely Gains: A tariff always helps the groups tied closely to the product, even when hurting the nation as a whole. What is a Tariff? Tax on traded products Tax on imported good; tax on exported good Specific (amount per unit) t s = amount per unit ($.50 per gallon) P + t s Ad Valorem (percent of value) t a = percent of value (5 % of value) P + t a P = (1+t a ) P Importance as Revenue Source United States Tariff Revenue as % Of Total Revenue 1789-1850 90-95% 1900 50% 1990s 1- 2% Tariff Revenue as % Of Total Revenue Various countries, Circa 1994 United States 1.55 Japan 1.24 Sweden .84 Norway .51 Denmark .05 United Kingdom .08 China 25.37 India 20.74 Pakistan 23.28 Lesotho 51.75 Belize 47.96 Guinea 47.43 Dominican Republic 43.68 Gambia 42.04 Why this particular pattern? Effects of Import Tariff Positive Analysis Impact on P D , QD, QS, and M and possibly P w Revenue consequences for government Normative Analysis Impact on the well-being of consumers, producers, and the nation as a whole Defining Small and Large Country in International Trade AUTARKY Price Price Sd Sf Pd Dd Pf Df Q Large Country in Trade http://en.wikipedia.org/wiki/Pupusahttp://en....
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WK7_27Sept_Ch_8_tariff - Chapter 8 Analysis of Tariffs Week...

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