Tariffs Matter More for Government Revenue Than Economic Growth
The article explores how trade restrictions affect the economy of the Philippines using a computer model. The researchers found that tariffs' impact on the economy and income distribution is not as significant as previously thought. Instead of improving resource allocation, tariffs mainly help the government collect revenue. For trade liberalization to work well, the government's fiscal policies and trade strategies must align. In simpler terms, the study shows that the government's choices about tariffs affect its income more than overall economic efficiency.