Tariff-Index Theory*

Authors

  • James E. Anderson


  • *

    Anderson: Boston College. Chestnut Hill, MA 02167. Tel: 617-552-3691, Fax: 552-2308. Research for this paper was supported by the Research Committee of the World Bank. the usual disclaimer applies.

Abstract

Tariff indices such as trade-weighted means, variances, and coefficients of variation are commonly used despite their lack of a theoretical foundation. This paper provides a theoretical framework for the index-number problem for tariffs. This paper shows that the Anderson and Neary (1993) trade-restrictiveness index is a function of “marginal trade-weighted moments” of the tariff schedule, higher mean and generalized variance both implying a higher TRI. In the CES case, the TRI is increasing in the trade-weighted mean and in the variance of the tariff schedule. For this special case the mean and the variance are partially legitimized.

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