Tariffs, quotas and terms-of-trade: The case of New Zealand

This paper reports quantitative information on the effects of tariffs and q uotas on prices of individual goods. The analyses uses the natural experime nt provided by a comprehensive unilateral trade policy reform in New Zealan d to examine the response of foreign exporters to an incident of liberalisa tion that is unique in the developed world. The price effects bf tariffs an d quotas are estimated using a multidestination 7-digit longitudinal produc t-level dataset on export values and quantities. The effects are found to b e by no means equivalent: Whereas tariffs display no significant effect, th e impact that quantitative restrictions have on the terms-of-trade of the c ountry that imposes them are unequivocally detrimental and quantitatively i mportant. (C) 1998 Elsevier Science B.V. All rights reserved.