Intersectoral Adjustment and Policy Intervention: the Importance of General-Equilibrium Effects
AbstractWe model adjustment costs in a general-equilibrium setting using a "transport sector." This sector provides services needed to reallocate a factor of production across two other sectors. A market imperfection in the transport sector causes adjustment to occur too slowly in the absence of government intervention. The government has a restricted menu of second-best policies to remedy this imperfection. Given this restricted menu, the optimal policy choice depends on the government's ability to make commitments. The key to these results is our replacement of the black box of adjustment costs with an explicit model of these costs. Copyright Blackwell Publishing Ltd 2005..
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of International Economics.
Volume (Year): 13 (2005)
Issue (Month): 2 (05)
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Other versions of this item:
- Karp, Larry S. & Theirry, Paul, 2002. "Intersectoral Adjustment and Policy Intervention: the Importance of General Equilibrium Effects," CUDARE Working Paper Series 893R, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
- Karp, Larry & Paul, Thierry, 2002. "Intersectoral Adjustment and Policy Intervention: the Importance of General Equilibrium Effects," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7rk3z9w1, Department of Agricultural & Resource Economics, UC Berkeley.
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