Fiscal Measures

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Fiscal Measures The two wins of , fiscal policy arc government revenues and govcn -uucnt expenditure. The government’s Ii. cal polic v can contribute to the control of inflatic neither hy reducing private spending by in rea ill)! the taxe ,1 private ector or by decreasinging g( ‘crn mcnt e. pen disturb, or combining boththe element . If private […]

Appraisal

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Appraisal After World War II, policymakers around the world believed firmly that free trade was essential for world prosperity. These convictions translated into several successful ‘:’agreements to lower tariffs, as Figure 15-10 shows, The free-trade philosophy of economists and market-oriented policymakers has been severely tested by periods’ of high- unemployment and exchange-rate disturbances. Nevertheless, most countries have continued the trend toward increased openness and […]

Regional Approaches

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Regional Approaches Over the last few years, governments have taken a number of steps to promote free trade or to broaden regional markets. Among the most important were the following: • The most controversial proposal for lowering trade barriers was the North American Free Trade Agreement (NAFTA), which was hotly debated and passed by Congress by a close vote in 1993. Mexico […]

Multilateral Agreements

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Multilateral Agreements One of the most success full multilateral agreements was the General Agreement on Tariffs and Trade (GATT), which became the World Trade Organization (WTO) at the beginning of 1995. Their charters speak of raising living standards through “substantial reduction of tariffs and .other barriers to trade and the elimination of discriminatory treatment in international commerce The Tow currently has 130 member […]

MULTILATERAL TRADE NEGOTIATIONS

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MULTILATERAL TRADE NEGOTIATIONS Given the tug of war between the economic benefits of free trade and the political appeal of protection, which force has prevailed? The history of U.S. tariffs. shown in Figure 15-10 on page 318. has been bumpy. For most of American history, the United States has bee’n a high-tariff nation. The pinnacle of protectionism came after the infamous Moot […]

Other Barriers to Trade

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Other Barriers to Trade While this chapter has mainly spoken of tariffs, most points apply equally well to any other impediments ‘to trade. Quotas have much the same effects as tariffs, for they prevent the comparative advantages of different countries from determining prices and outputs in the marketplace. In recent years, countries have negotiated quotas with other countries. The United States. for example, forced […]

Tariffs and Unemployment.

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Tariffs and Unemployment. Historically, a powerful motive for protection has been the desire to increase employment during a period of recession or stagnation. Protection creates jobs by raising the price of imports and diverting demand toward domestic duction Figure 15-8 demonstrates this effect. As domestic demand increases, firms will hire more workers and unemployment will fall.2 This too is a beggar-thy-neighbor policy. […]

Tariff From Infant Industries

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Tariff From Infant Industries  Alexander Hamilton proposed .to the  growth of manufacturing by protecting “infant industries” &om foreign competition. According· to this doctrine, which received the cautious support economists like John Stan Mill and  Mar Shall, there are lines of production in which a country could have a comparative attractant if only could get started. This argument must be weighed cautiously. Historical studies […]

The Terms of Trade or Optimal Tariff Arguments

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The Terms of Trade or Optimal Tariff Arguments One valid argument for imposing tariff that doing so will shift the terms of trade in a country’s favor and against foreign countries. The phrase In as of track refers. to the ratio of expend prices to import prices. The idea is that when .a large country levies tariffs on its imports, the […]