02058cas a2200253 a 4500 AALejournalIMF011887 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475503944 1018-5941 BD-DhAAL BD-DhAAL Tervala, Juha. Tariff-Tax Reforms in Large Economies / Juha Tervala, Giovanni Ganelli. Washington, D.C. : International Monetary Fund, 2012. 1 online resource (32 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper studies tariff-tax reforms in a calibrated two-region global New Keynesian model composed of a developing and an advanced region. In our baseline calibration, a revenue-neutral reform that lowers tariffs in developing countries can reduce domestic welfare. The reason is that the increase in developing countries welfare due to higher output is dominated by the welfare losses stemming from the deterioration of the terms of trade. On the other hand, the reform increases output and welfare in the advanced countries and in the world as a whole. The effects that we highlight have not been studied in previous contributions to the literature, which typically looks at tariff-tax reforms using a small open economy framework. Nominal rigidities have important implications for adjustment dynamics in our model. In the case of a "point-for-point" reform, for example, price stickiness implies that the international dynamics of output is reversed compared to a revenue neutral reform. Mode of access: Internet Ganelli, Giovanni. IMF Working Papers; Working Paper ; No. 2012/139 Full text available on IMF http://elibrary.imf.org/view/journals/001/2012/139/001.2012.issue-139-en.xml IMF e-Library