Overshooting Adjustment to Tariff Liberalization
Journal
Open Economies Review
ISSN
0923-7992
ISSN-Digital
1573-708X
Type
journal article
Date Issued
1996-07-01
Author(s)
Abstract
The article analyzes the dynamic effects of tariff liberalization on a small open economy. The primary focus is on nonmonotonic adjustment patterns of net lending such as overshooting or opposite short- and long run effects. When capital accumulation tilts wage income toward the future in the early transition periods, present generations perceive life-cycle type savings disincentives which create a transitory shortfall in savings. In the long run, wage profiles become flat again, and the savings deficiency vanishes. The transitory savings component may give rise to overshooting or opposite short- and long-run adjustment in the total stock of savings and net foreign assets.
Language
English
HSG Classification
not classified
Refereed
No
Publisher
Springer Dordrecht
Publisher place
Dordrecht/NL
Volume
7
Number
3
Start page
237
End page
255
Pages
19
Subject(s)
Eprints ID
21977