Impact Of Tariff On Income: Cross Country Analysis
DOI:
https://doi.org/10.31384/jisrmsse/2019.17.1.13Keywords:
OLS Regression, Panel (IPS), Johansen Cointegration, Panel CointegrationAbstract
The purpose of the study is to assess the significance of import tariff on the economic growth of ten countries divided into two groups; developing and developed economies. The developed countries included in the sample are Australia, Japan, Canada, Turkey and United States. The developing group of countries consists of Pakistan, Sri Lanka, India, Bangladesh and Thailand. The time period taken span from 1998 till 2015.The cross-country analysis included in the study ranges from the application of OLS regression methods to country wise, unit root test and long run analysis. In addition, Panel Unit Root and Panel Cointegration Tests are also performed to enhance the analysis. The test results of Unit Root Test show that the series are non-stationary at level and on taking first difference these becomes stationary. After we established that the series are integrated of order 1 we proceeded with the Johansen test of Cointegration which established the long run associations among the variables. The Panel Cointegration (Larsson et al. 2001) technique is used to establish the long run association in a panel framework. The findings show long run associations among the variables. It is however reviewed that the policy variable import tariff cannot be used standalone to bring prosperity for the country specially in developing countries. The country needs support of infrastructure enhancement, technological advancement and education in order to fully reap the benefits of protection provided to the industries.
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