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Tariff Rate Uncertainty and the Structure of Supply Chains.
- Source :
- Working Papers -- U.S. Federal Reserve Board's International Finance Discussion Papers; Apr2024, Issue 1389, p1-45, 45p
- Publication Year :
- 2024
-
Abstract
- We show that reducing the probability of a trade war promotes long-term importer- exporter relationships that ensure provision of high-quality inputs via incentive premia. Empirically, we introduce a method for distinguishing between these long-term relationships|which the literature has termed "Japanese" due to their introduction by Japanese firms|from spot-market relationships in customs data. We show that the use of "Japanese" relationships varies intuitively across trading partners and products and find that the use of such relationships increases after a reduction in the possibility of a trade war. Extending the standard general equilibrium trade model to encompass potential trade wars and relational contracts, we estimate that eliminating "Japanese" procurement reduces welfare about a third as much as moving to autarky. [ABSTRACT FROM AUTHOR]
- Subjects :
- TARIFF
SUPPLY chains
INTERNATIONAL trade disputes
GOVERNMENT purchasing
EQUILIBRIUM
Subjects
Details
- Language :
- English
- Issue :
- 1389
- Database :
- Complementary Index
- Journal :
- Working Papers -- U.S. Federal Reserve Board's International Finance Discussion Papers
- Publication Type :
- Report
- Accession number :
- 179058188
- Full Text :
- https://doi.org/10.17016/IFDP.2024.1389