Growth, Expectations, and Tariffs

Seppo Honkapohja, Arja H. Turunen-Red and Alan Woodland

No 3435, CESifo Working Paper Series from CESifo

Abstract: 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.

Keywords: endogenous growth; expectations; learning; short run dynamics; tariffs; complementary capital goods (search for similar items in EconPapers)
JEL-codes: F15 F43 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Growth, expectations and tariffs (2016)
Journal Article: Growth, expectations and tariffs (2016)
Working Paper: Growth, expectations and tariffs (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3435

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