Description: Department Seminar: Sewon Hur (Dallas Federal Reserve)
Location: 368A Heady Hall
Contact: Juan Carlos Cordoba
Title: "On the Distributional Effects of International Tariffs"
Abstract: We provide a quantitative analysis of the distributional eects of the 2018 increase in tariffs by the US and its major trading partners. We build a trade model with incomplete asset markets and households that are heterogeneous in their age, income, wealth, and labor skill. When tariff revenues are used to reduce distortionary taxes on consumption, labor, and capital income, the average welfare loss from the trade war is equivalent to a permanent 0.1 percent reduction in consumption. Much larger welfare losses are concentrated among retirees and low-wealth households, while only wealthy households experience a welfare gain.