Date of Award
Doctor of Philosophy
Canada's demand for imports is examined using an econometric model derived from production theory. The production theory approach provides a useful framework for examining two important issues: the effects of Canada's tariff policies on wage and rental rates, and the effects of changes in the price of imports on the demand for imports.;Three important problems that arise in moving from the theoretical model of the production sector to the econometric model are examined in the empirical work: choosing a method of analysing the technology of the production sector; specifying a functional form for the technology; and specifying the speed with which the production sector adjusts following any change in exogenous variables.;The empirical results provide strong evidence that Canada's tariff policies redistribute income from owners of labour to owners of capital. In fact, higher import prices--caused by (increases in) tariffs, for example--lead to an increase in the rental rate and a decrease in the wage rate. The empirical results also indicate that Canadian import demand is quite responsive ("elastic") to changes in the price of imports.;The gradual adjustment of the production sector in response to an increase in the price of imports is analysed in the theoretical work. The analysis focuses on how domestic factor prices change during the various stages of the adjustment. One interesting result is that the short-run changes in the prices of some or all of the domestic factors could be reversed in the long run. Thus, there could be a conflict between the short-run and long-run interests of the owners of domestic factors.
Murphy, Brendan, "Canadian Import Demand, And The Effects Of Tariffs On The Prices Of Domestic Factors" (1982). Digitized Theses. 1187.