International Factor Mobility, Non-traded Goods, Tariffs, and the Terms of Trade
AbstractThe present paper develops a general model with one imported, one exported, many non-traded goods, where some factors of production are internationally mobile. Within this framework, the analysis establishes the validity of some earlier results and extends others. That is, (1) a tariff increase reduces the country's welfare; (2) tariff-induced international factor flows reduce a country's welfare; (3) an improvement in a country's terms of trade in the presence of a tariff raises its welfare more when factors are internationally mobile than when not; and (4) with preferential trading agreements, trade creation always improves the country's welfare, while trade diversion may or may not.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 25 (1992)
Issue (Month): 2 (May)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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- Gatsios, Konstantine, 2000. "Terms of Trade Shocks and Domestic Prices under Tariffs and Quotas: A Note," CEPR Discussion Papers 2593, C.E.P.R. Discussion Papers.
- Harry P. Bowen & Jennifer Pedussel Wu, 2011.
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- Fung, Michael Ka-Yiu, 1996. "Who pays for fiscal expansion? Distributional effects of fiscal spending in a small open economy with foreign capital," Journal of Macroeconomics, Elsevier, vol. 18(4), pages 715-726.
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