Effects of Tariff Rate on the Net Exports of Different Economic Sectors in Iran

Subject Areas : Futurology

Oranus Parivar ¹ (ندارد)

Received: 2015-05-03 Accepted : 2015-05-03 Published : 1999-11-22

Keywords:

Abstract :

The objective of this study is to provide a partial equilibrium analysis of the effects of tariff and exchange rate policy on the net exports with the particular emphasis on the selected economic sectors. The eight economic sectors in the model are agriculture; food, beverages and tobacco; textiles; wood; chemicals; construction; paper and miselaneous which contains metallic and non merallic products. The present study has three main steps. The first step shows the estimates of nominal tariff rates of eight economic sectors for 1371 and 1373. Comparing the different tariff rates, one can see from the estimates that the cost of imports in all sectors has substantially increased in spite of decreasing rate of tariff in 1372. In fact the reconstruction of tariff system was substantially affected by exchange rate regim in 1372. The second step indicates the model which captures the short run effects of tariff and exchange rate policies through the price system. Estimation of composite good function which takes the form of a CES function shows that interaction between import quotas and price distortions are significant in agriculture and food sectors. The third step presents the results of the simulation analysis. In the simulation, the model is calibrated using 1373 as the base year and the results are expressed in percentage changes from this base year. A decline in tariff rates increase the import of textile, wood and paper sectors more than the other sectors, The implementation of this policy however is complicated because it increases the volume of imports in all sectors and creats a net export problem. The policy that would conteract this problem is devaluation of the exchange rate.