Tariffs Disrupt Productivity and Factor Supply, Threatening Economic Stability
This study examines how import tariffs affect the economy using two big models: a Purdue University model and an IMF model. The models show that when tariffs go up, different things happen. In the Purdue model, higher tariffs lead to output loss due to resources moving inefficiently between sectors. In the IMF model, tariffs make it less attractive to use labor and capital. Basically, the Purdue model looks at how tariffs impact overall productivity, while the IMF model considers how they affect the use of resources. By combining both models, we get a better understanding of how tariffs influence the economy.