Mary Amiti, Mi Dai, Robert Feenstra, John Romalis, 28 June 2017

China has become the world’s largest exporter, with a rapid rise in its world trade share just after it joined the WTO in 2001. This column finds that China’s WTO entry reduced the US manufacturing price index by 7.6% between 2000 and 2006, with most of this effect arising from China reducing its own import tariffs. US consumers gained because they paid less for manufactured goods and because they had access to more varieties of goods.

Jason Furman, Katheryn Russ, Jay Shambaugh, 12 January 2017

Tariffs – taxes on imported goods – likely impose a heavier burden on lower-income households, as these households generally spend more on traded goods as a share of expenditure/income and because of the higher level of tariffs placed on some key consumer goods. This column estimates the tariff burden by income group and by family structure using a new dataset constructed by matching of granular data on trade and consumer spending. The findings suggest that tariffs function as a regressive tax that weighs most heavily on women and single parents.

Javier Cravino, Andrei Levchenko, 23 November 2015

Large exchange rate swings remain a prominent and recurring feature of the world economy. This column uses household consumption patterns to examine the distributional impact of the devaluation of the peso during Mexico’s ‘Tequila Crisis’. Cost of living increases are found to be 1.25 to 1.6 times higher for the poor compared to the rich. In the interests of equity, exchange rate policy should take account of such distributional impacts.

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