Working Paper: NBER ID: w22062
Authors: Ralph Ossa
Abstract: What tariffs would countries impose if they did not have to fear any retaliation? What would occur if there was a complete breakdown of trade policy cooperation? What would be the outcome if countries engaged in fully efficient trade negotiations? And what would happen to trade policy cooperation if the world trading system had a different institutional design? While such questions feature prominently in the theoretical trade policy literature, they have proven difficult to address empirically, because they refer to what-if scenarios for which direct empirical counterparts are hard to find. In this chapter, I introduce research which suggests overcoming this difficulty by applying quantitative models of commercial policy.
Keywords: Trade Policy; Quantitative Models; Optimal Tariffs
JEL Codes: F12; F13; O19
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| absence of retaliation (D74) | higher tariffs (F19) |
| breakdown in trade policy cooperation (F13) | substantial increase in tariffs (F13) |
| negotiation efficiency (D61) | lower optimal tariffs (F13) |