Tariffs, the Terms of Trade, and the Distribution of National Income

Metzler, Lloyd A.

doi:10.1086/256766

Cited by 183 publications

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“…The impact of government spending on relative prices, output, and consumption comes entirely from its role in the reallocation of demand, as in Metzler (1949). A permanent increase in government spending tilts demand in favor of the home good and drives up its relative price.…”

Section: Increase In Government Spendingmentioning

confidence: 99%

“…The focus is on the reallocative effects of fiscal policy a la Metzler (1949), since it considers tax-financed, rather than debt-financed, increases in government spending. The analysis extends the work of Reinhart (1988) in two directions.…”

mentioning

confidence: 99%

“…Closing the system requires specifying the behavior of the public sector. To focus on the reallocative effects of government spending, the government is assumed to run a balanced budget and the lump-sum tax levied on the households of the home country, T~, is assumed to be directed entirely to the purchase of the home good, as in Metzler (1949).4 These purchases are denoted by g~. All markets clear continuously; the equilibrium conditions for the commodity, good 1, and good 2, respectively, are given by yf = m~+ mỹ~= gt, + et, + eft + e~ ( 11) (12) y~= e~+ e~+ e~.…”

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confidence: 99%

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Fiscal Policy, the Real Exchange Rate, and Commodity Prices

Reinhart

1991

Staff Papers - International Monetary Fund

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Section: Increase In Government Spendingmentioning

confidence: 99%

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confidence: 99%

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confidence: 99%

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Fiscal Policy, the Real Exchange Rate, and Commodity Prices

Reinhart

1991

Staff Papers - International Monetary Fund

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“…Much of the existing literature on macro-economic effects of tariffs seems to lend support to that approach (at least under a fixed exchange rate regime). For a recent exposition, see Dornbusch (1980) or Chalciolades (1978) who provide further references going all the way back to Metzler (1949). See furthermore, Johnson (1958), Mussa (1974a) or Boyer (1977).…”

Section: Introductionmentioning

confidence: 99%

Tariffs, Employment and the Current Account: Real Wage Resistance and the Macroeconomics of Protectionism

Wijnbergen¹

1987

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Using a standard complete specialization model of a small open economy within a rigorous intertemporal optimization framework with contractbased wage rigidity, we show that permanent tariffs may lead to a current account deterioration and a fall in employment, contradicting most of the literature of macro-economic effects of import tariffs. I show that this will always be the case if the economy is small enough. The crucial factor in this complete reversal of standard results is the impact of tariffs on domestic real product wages via wage indexation. Temporary tariffs will have less of a negative impact on the CA or potentially even a positive impact, because they increase the consumption rate of interest (the ternis at which future consumption can be traded for current consumption) and so increase private savings.Extensions towards incorporating a more general production structure, investment and the use of tariff revenues to provide wage subsidies are presented.Sweder van Wijnbergen Room S13-141

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“…It is also known that in the large-country case, that is, in the case in which a country's import (export) volume influences its external terms of trade, an imposition of a tariff may induce a resource flow out of the import competing industry and into the export industry. This is known as the Metzler Paradox (see Metzler 1949). In the smallcountry case, the imposition of the tariff necessarily reduces the internal terms of trade because the external terms of trade do not change.…”

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confidence: 99%