Faculty of Science, Technology and Medicine
Faculty of Law, Economics and Finance
Faculty of Humanities, Education and Social Sciences
Interdisciplinary Centre for Security, Reliability and Trust
Luxembourg Centre for Systems Biomedicine
Luxembourg Centre for Contemporary and Digital History
Luxembourg Centre for European Law
Luxembourg Centre for Socio-Environmental Systems
“The Effects of Transitory and Permanent U.S. Import Tariff Shocks”
Abstract
We estimate the effects U.S. import tariff shocks. We find that distinguishing between transitory and permanent tariff shocks is important. Transitory tariff increases lower inflation, increase output, and weaken absorption. Permanent tariff increases trigger a one-off increase in the price level but are not contractionary. Consistent with the intertemporal approach, transitory tariff increases improve the trade balance, whereas permanent increases leave it largely unchanged. Tariff shocks are estimated to be minor drivers of U.S. business cycles.
The estimated effects are shown to be qualitatively consistent with the predictions of an optimizing model with an import-competing sector.
About the speaker
Stephanie Schmitt-Grohé is a Professor and Director of Graduate Studies.
Language
English.
This is a free seminar. Registration is mandatory.
Cold lunches are provided to registered participants.
In partnership with
This is a joint event held with the European Stability Mechanism and the Department of Finance of the University of Luxembourg.