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Vertical Specialization, Intermediate Tariffs, And The Pattern Of Trade: Assessing The Role Of Tariff Liberalization To U.S. Bilateral Trade 1989-2001

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Executive Summary

How important are intermediate tariffs in determining trade patterns? Empirical work measuring the impact of tariff liberalization most commonly focuses on the effects of barriers imposed by importers, but exporter trade policy should also matter when exports are produced with imported intermediates. Guided by extensions of the Eaton and Kortum (2002) model, the author studies the impact of trade liberalizations on U.S. bilateral trade from 1989-2001. The author estimates the impact on U.S. bilateral trade flows of both intermediate tariffs imposed by countries exporting to the United States and U.S. tariffs.

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