Import tariff pass-through effect and the spatial distribution of domestic consumer goods prices: Zimbabwe (2009-2014)

The study of import tariffs pass-through has been observed to be crucial for policy making, for instance, this may inflate some goods’ prices thus harming individual welfare. However, the extant literature on the import tariffs pass-through effect has largely ignored the possibility of spatial dependence between domestic goods prices which may brew imprecise estimates. Hence, this study proposes an extension of the traditional empirical model for estimating the import tariff pass-through effect by introducing controls for the domestic spatial dependence of prices. The estimates rely on a panel dataset of consumer goods for Zimbabwe, which has both the individual and time spatial effects. The spatial econometrics model used in this study all agree that there is positive spatial dependence of domestic goods’ prices in Zimbabwe over the period 2009 to 2014. When compared to our modified model, the traditional import tariffs pass-through model was found to highly overestimate the import tariffs pass-through effect. The study found that a positive and significant portion of import tariffs is being passed on to domestic goods prices in Zimbabwe. Thus, there is a need for policy to be cautious of the import tariffs increase in relationship to national inflation, and poverty targets.

Working paper 879

Related South Africa’s Cities and Growth Spatial Challenges and Policy Interventions Content

Request for Proposals: The role of cities as drivers of growth and employment
Background Urbanization in South Africa is expected to reach 80% by...
Call for Work
South Africa’s future will be decided in our cities
Discussion Document 14 South Africa’s cities face multiple, overlap...
Dieter von Fintel, Justin Visagie, Ivan Turok, Takwanisa Machemedze, Claus Rabe, Sebastian Galiani, Edward Glaeser
Discussion Document
Monitoring South Africa’s metropolitan economies: A survey of the data landscape
Discussion Document 13 Disparities in data across different metropo...
Dieter von Fintel
Discussion Document
Cities, productivity and Jobs in SA: Problems and potential
Discussion Document 12 Cities contribute to national prosperity bec...
Ivan Turok, Justin Visagie
Discussion Document
Place-based economic policies: international lessons for South Africa
Discussion Document 11 Place-based policies are designed to support...
Harris Selod, Claus Rabe
Discussion Document
What luminosity data can and cannot reveal about South Africa’s urban economies
Discussion Document 10 As novel types of data are becoming availabl...
Takwanisa Machemedze
Discussion Document
Crime: A policy-oriented survey
Discussion Document 9 South Africa has a reputation for having high...
Sebastian Galiani
Discussion Document
Virtual CDE Workshop on SA Cities and Growth
Urban economics has provided powerful insights into how the charact...