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International Factor Mobility, Non-traded Goods, Tariffs, and the Terms of Trade

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  • Michael S. Michael

Abstract

The 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 Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 25 (1992)
Issue (Month): 2 (May)
Pages: 493-99

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Handle: RePEc:cje:issued:v:25:y:1992:i:2:p:493-99

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Cited by:
  1. Harry P. Bowen & Jennifer Pedussel Wu, 2011. "Immigrant Specificity and the Relationship between Trade and Immigration: Theory and Evidence," Discussion Paper Series 2011-01, McColl School of Business, Queens University of Charlotte, revised 13 Jul 2012.
  2. 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.
  3. Connely, Michael & Devereux, John & Cortes, Mariluz, 1995. "The transhipment problem: Smuggling and welfare in Paraguay," World Development, Elsevier, vol. 23(6), pages 975-985, June.
  4. 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.

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