Trade Policy and Structural Change
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arXiv
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| Auteurs principaux: | , , |
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| Format: | Preprint |
| Publié: |
2025
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| _version_ | 1866915619621830656 |
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| author | Kato, Hayato Suzuki, Kensuke Takahashi, Motoaki |
| author_facet | Kato, Hayato Suzuki, Kensuke Takahashi, Motoaki |
| contents | We study how tariffs affect industrial structure and welfare in an economy where sectors are complements and preferences are nonhomothetic -- two drivers of structural change. Import tariffs on a sector influence sectoral composition by affecting its price relative to other sectors and national income, as well as the sector's net exports. We qualitatively characterize these mechanisms and use a quantitative dynamic model to show that a counterfactual 20-percentage-point increase in U.S. manufacturing tariffs would have raised the manufacturing value-added share by one percentage point and increased welfare by 0.41 percent. If trading partners retaliated, welfare would have fallen. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2508_01360 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Trade Policy and Structural Change Kato, Hayato Suzuki, Kensuke Takahashi, Motoaki General Economics Economics We study how tariffs affect industrial structure and welfare in an economy where sectors are complements and preferences are nonhomothetic -- two drivers of structural change. Import tariffs on a sector influence sectoral composition by affecting its price relative to other sectors and national income, as well as the sector's net exports. We qualitatively characterize these mechanisms and use a quantitative dynamic model to show that a counterfactual 20-percentage-point increase in U.S. manufacturing tariffs would have raised the manufacturing value-added share by one percentage point and increased welfare by 0.41 percent. If trading partners retaliated, welfare would have fallen. |
| title | Trade Policy and Structural Change |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2508.01360 |