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Are tariffs bad for growth? Yes, say five decades of data from 150 countries

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  • Furceri, Davide
  • Hannan, Swarnali A.
  • Ostry, Jonathan D.
  • Rose, Andrew K.

Abstract

The empirical evidence on the growth effects of import tariffs is sparse in the literature, notwithstanding strong views held by the public and politicians. Using an annual panel of macroeconomic data for 151 countries over 1963–2014, we find that tariff increases are associated with an economically and statistically sizeable and persistent decline in output growth. Thus, fears that the ongoing trade war may be costly for the world economy in terms of foregone output growth are justified.

Suggested Citation

  • Furceri, Davide & Hannan, Swarnali A. & Ostry, Jonathan D. & Rose, Andrew K., 2020. "Are tariffs bad for growth? Yes, say five decades of data from 150 countries," Journal of Policy Modeling, Elsevier, vol. 42(4), pages 850-859.
    • Handle: RePEc:eee:jpolmo:v:42:y:2020:i:4:p:850-859
    DOI: 10.1016/j.jpolmod.2020.03.009
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    Cited by:

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    2. Manuel Funke & Moritz Schularick & Christoph Trebesch, 2023. "Populist Leaders and the Economy," American Economic Review, American Economic Association, vol. 113(12), pages 3249-3288, December.
    3. Khorana, Sangeeta & Caram, Santiago & Biagetti, Marco, 2021. "Developmental relevance of Everything but Arms: Implications for Bangladesh after LDC graduation," MPRA Paper 116258, University Library of Munich, Germany.
    4. Nantembelele, Fatuma Abdallah & Yilmaz, Mustafa K. & Ari, Ali, 2023. "The effects of a US-China trade war on Sub-Saharan Africa: Pro-active domestic policies make the difference," Journal of Policy Modeling, Elsevier, vol. 45(6), pages 1296-1310.
    5. Hina Altaf & Qurat Al Ain Shabir, 2024. "Critical Analysis of Revenue Generation of Azad Jammu and Kashmir: Challenges and Way Forward," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(1), pages 920-929.
    6. Bajo-Rubio, Oscar & Ramos-Herrera, María del Carmen, 2023. "Does international trade promote economic growth? Europe, 19th and 20th centuries," GLO Discussion Paper Series 1358, Global Labor Organization (GLO).
    7. Tullio Gregori & Marco Giansoldati, 2023. "Do current and capital account liberalizations affect economic growth in the long run?," Empirical Economics, Springer, vol. 65(1), pages 247-273, July.
    8. Basu, Anwesha & Marjit, Sugata & Veeramani, C., 2024. "Growth gains from offshore outsourcing," Journal of Policy Modeling, Elsevier, vol. 46(1), pages 90-112.
    9. Masashige Hamano & Francesco Pappadà & Maria Teresa Punzi, 2023. "Optimal Monetary Policy, Tariff Shocks and Exporter Dynamics," Working Papers 2309, Waseda University, Faculty of Political Science and Economics.

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    More about this item

    Keywords

    Output; VAR; Protectionism; Macroeconomic;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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