Optimum Tariffs, Revenue-Maximizing Tariffs and Unemployment : A General Disequilibrium Analysis

• This paper uses recently developed non-Walrasian equilibrium models of open economies to characterize the optimum tariff under both Classical and Keynesian Unemployment regimes. The existing literature concentrates on the former. Keynesian unemployment has notbeen considered, presumably because of the difficulty integrating macroeconomic models of unemployment and microeconomic policy analyses in the presence of domestic distortions. Interestingly, the optimum tariff under either type of unemployment may lie above the revenue-maximizing tariff in contrast to the well-known result obtained in the Walrasian equilibrium context.

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