Aggregation and the Welfare Analysis of US Tariffs


A recurrent concern of researchers who measure the cost of protection is that welfare estimates based on models with highly aggregated sectors of the economy in question will understate the true cost of protection if the tariff system is not uniform. Uses the 1988 tariff schedule of the US and a detailed 1988 social accounting matrix of the US to construct a number of aggregation schemes to calculate the extent to which tariff means and variances change under different aggregations. Then uses a computable general equilibrium model to compare the cost of tariff protection between two of the aggregation schemes.Economy, Models, Protectionism, Social accounting, Tariffs, USA, Welfare

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This paper was published in Research Papers in Economics.

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