DID GOOD INSTITUTIONS PRODUCE GOOD TARIFFS? EVIDENCE FROM TARIFF PROTECTION IN COLONIAL VICTORIA

Authors

  • JOHN K. WILSON,

    1. University of South Australia
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  • MARTIN P. SHANAHAN

    1. University of South Australia
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    • The authors would like to thank helpful comments made on earlier versions of this paper by participants of the ‘Conference on Tariffs in History’ held in Madrid, May 2010, the APEBH Conference in Wellington, February 2010, and referees of this journal.


Abstract

Were tariff rates in the Australian colony of Victoria directed towards growth-enhancing industries or rent seekers? Recent research suggests tariffs may be welfare enhancing if they are directed at industries with positive externalities; something more likely when institutions are strong. Using disaggregated tariff data for the years 1872, 1880, and 1890, we analyse the relationship between industry characteristics and tariffs, finding little evidence that Victorian industries with positive externalities received tariff protection. Our results throw doubt on good institutions necessarily producing good tariff outcomes and suggest the relationship between tariffs and growth is more complex than current studies assume.

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