Trade Policy Persistence and Long-Run Economic Performance: Evidence from Tariff Dynamics in Peru

The resurgence of trade policy interventions in the global economy has renewed interest in the long-run macroeconomic implications of commercial barriers. While previous research has largely focused on the short-term effects of tariff reforms and trade liberalization, relatively less attention has been paid to the persistence of trade policy regimes over time. This study addresses this gap by analysing the relationship between trade policy persistence—proxied by the trajectory of the Nominal Average Tariff (NAT)—and Peru’s real GDP during the period 1980–2025. Using a Johansen cointegration framework combined with a Vector Error Correction Model (VECM), the study evaluates both the existence of a long-run equilibrium relationship and the dynamics of adjustment following deviations from that equilibrium. The econometric evidence confirms the existence of a stable long-run relationship between the NAT and aggregate GDP. The normalized cointegrating vector suggests that higher and persistent levels of tariff protection are associated with lower levels of real GDP in the long run. The estimated error-correction mechanism further indicates that deviations from equilibrium are gradually corrected through adjustments in the trajectory of real GDP, whereas the tariff equation does not exhibit a statistically significant adjustment process at conventional levels. This asymmetric structure suggests that trade policy persistence operates as a relatively stable macroeconomic condition, while aggregate GDP gradually adjusts to long-run disequilibria. By framing tariffs not only as policy instruments but also as indicators of persistent policy orientations, the study contributes to the trade and growth literature from a persistence-based perspective. The findings additionally highlight the potential relevance of policy consistency and predictability in small open economies characterized by high external dependence and prolonged processes of trade liberalization.