Comment by carefree-bob
5 days ago
You really believe that the incidence of taxation falls 100% on the buyer and never the seller? And you think those who have a more accurate view are "lying"?
Please learn a bit about the incidence of taxation: https://stantcheva.scholars.harvard.edu/sites/g/files/omnuum... The main models supporting your view is where consumer income is exogenous and all firm profits are redistributed to the representative consumer as a lump sum transfer: https://www.ief.es/docs/destacados/publicaciones/revistas/hp...
Please avoid simplistic beliefs and moral outrage for things as complex as trade policy. The people who say that the incidence of taxation falls heavily on sellers may just be better informed, particularly when listening to wall street earnings calls while simultaneously looking at the consumer price data.
Indeed; it's not 100%. It's actually 96%: https://www.kielinstitut.de/publications/news/americas-own-g...
LOL. Have you read that paper? And do you believe the BLS is lying about inflation data?
Let's take a look at the latest EU-consensus reinforcing pamphlet pushed out by Kiehl, because when Mahlkow wrote about tarrifs in 2022, he was all for them. At that time the EU was debating imposing tariffs on Russia, and here Mahlkov insisted that there would be massive economic long term contraction for Russia - which did not happen -- yet simultaneously, Mahlkow predict no meaningful effect of the EU's tariffs on the EU itself. You see, at that time, Mahlkov insisted that because the EU GDP was larger, there would be no impact on the EU itself as a result of tariffs.
https://www.kielinstitut.de/fileadmin/Dateiverwaltung/IfW-Pu...
Now let's dig into the crazy assumptions of Mahlkow's model. Does he use sophisticated econometric analysis? No, what he does is look at shipping containers and published tariff rates. What he assumes is that if, before the tariffs, there were 100 units shipped, but after the tariffs, there were also 100 units shipped, then it must be that 100% of the cost was passed onto the consumer.
You see, some tariffs (which the EU bureaucracy and it's various patronage organizations like Kiehl) support don't cause any harm to the nation levying the tariff, but other tariffs are deadly, and fortunately Mahlkov will pick the right model to reach the right conclusion. No looking at pallet data in 2022!
Now what is wrong with looking at pallet data for a brief period of time. It never occurs to Mahlkov that the corporations importing the goods have to absorb some of the cost. Mahlkov just assumes 100% is passed through to consumers and the importers pay nothing.
This must mean the BLS is committing some kind of fraud as this has not been showing up in CPI data.
I'll leave you to decide whether this is warranted or not, but let's just say there is a reason this remains a "brief" available to download and is not a published paper.
Meanwhile, real economists, even though the profession is politicized, nevertheless understand that they missed the boat on estimating tariff effects, and that the models need updating. To a real researcher, it's actually a great opportunity. But to someone like Mahlkov, who is trotted out whenever there needs to be economic support for or against the same policy, he will gladly write a paper. And then others will cite it.