Working Paper: NBER ID: w13450
Authors: Douglas A. Irwin
Abstract: This paper calculates the Anderson-Neary (2005) trade restrictiveness index (TRI) for the United States using nearly a century of data. The results show that the standard import-weighted average tariff understates the TRI, defined as the uniform tariff that yields the same welfare loss as the existing tariff structure, by about 75 percent. The static deadweight welfare loss from the U.S. tariff structure is about one percent of GDP after the Civil War, but falls almost continuously thereafter to less than one-tenth of one percent of GDP by the early 1960s. On average, import duties resulted in a welfare loss of 40 cents for every dollar of revenue generated, slightly higher than contemporary estimates of the marginal welfare cost of taxation.
Keywords: trade restrictiveness index; tariffs; deadweight loss
JEL Codes: F13; N71; N72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| U.S. tariffs (F19) | deadweight welfare loss (D69) |
| average import duties (F10) | economic welfare (D69) |
| TRI (Y20) | average tariffs (F19) |
| correlation coefficient between TRI and average tariffs (F14) | underestimation of average tariff measure (F14) |