Testing Tariff Endogeneity in Korea : 한국의 사례로 본 내생적 관세 이론

목차 (Table of Contents)

• Trade liberalization has been continuously pursued especially in the form of alleviating trade barriers. However, tariffs have been the main source of protection. Tariffs were seen as exogenous in the context of politics until ‘political economy’ introduced. The literature on the political economy of trade protection treats the tariff as endogenous and researchers have attempted to explain the formation of tariffs within the model using various macroeconomic variables.
• Theory of Endogenous Protection predicts that macroeconomic disturbances will lead to changes in tariffs. It also suggests that macroeconomic condition affects tariffs through policy responses to political pressure.
• This paper tests an endogenous tariff model for Korea. It is found that the average tariff level is co-integrated with macroeconomic variables such as import penetration, industry growth, and employment and that tariff has responded to disturbances in these variables. Major findings of the study as follow; first, establishments (as the number of establishments scaled by turnover) are strongly negatively correlated with tariff. Second, the change of import penetration is negatively and statistically significantly correlated with tariff. Third, capital intensity is positively correlated with import penetration. Fourth, labor intensity is strongly correlated with import penetration and statistically significant as well. The results suggest that, the average tariff rate is co-integrated with macroeconomic variables in Korea.