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Arndt-Corden Department of Economics at the ANU Crawford School of Public Policy presents


US-China rivalry: the macro policy choices


ACDE Trade and Development Seminars



28th May 2019


Griffin Room, #132, Crawford Building, Lennox Crossing, The ANU



Stylised representations of recent US and Chinese tax reforms, tariffs against imports, and alternative Chinese monetary targeting are examined using a calibrated global macro model that embodies both trade and financial interdependencies. For both countries, unilateral capital tax relief and bilateral tariffs are shown to be ‘beggar thy neighbour’ in consequence, with tariffs most advantageous for the US if revenue finances consumption tax relief. China is nonetheless a net loser when these policies are implemented unilaterally by the US, irrespective of its policy response, though a currency float is shown to cushion the effects on its GDP in the short run. Equilibria in normal form non-cooperative tariff games exhibit spill-overs that are substantial but insufficient to deter dominant strategies. The US imposes tariffs while China liberalises, sustaining fiscal balance via consumption tax relief in the US and via expenditure constraint in China.

Please note change from originally advertised topic.

Rod Tyers is a specialist in applied international economics. He has undergraduate and masters degrees from the University of Melbourne and a doctorate from Harvard University. He has held brief academic appointments at the University of Hawaii and the University of Adelaide and more extended ones at the Australian National University. He is Winthrop Professor of Economics at the University of Western Australia, though he retains an Adjunct Professorship at the Research School of Economics in the Australian National University.

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