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Tariffs, Income Distribution and Welfare in a Small Overlapping-Generations Economy

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Author Info
Galor, Oded

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Abstract

This paper analyzes the welfare implications of an import tariff for a small overlapping-generations economy. The study analyzes the role of income redistribution, induced by the imposition of a tariff, in the determination of the time path of welfare levels. It is shown that despite homotheticity, the (implicit) pattern of distribution of tariff revenues is an integral and prominent component in the assessment of the welfare consequences of a tariff. The analysis provides sufficient conditions under which a tariff increases short-run as well as long-run welfare despite the absence of changes in the terms of trade. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Publisher Info
Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 35 (1994)
Issue (Month): 1 (February)
Pages: 173-92
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Handle: RePEc:ier:iecrev:v:35:y:1994:i:1:p:173-92

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  1. Richard Baldwin, 1989. "Measureable Dynamic Gains from Trade," NBER Working Papers 3147, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Joseph Francois & Hugo Rojas-Romagosa, 2005. "Household Inequality, Welfare, and the Setting of Trade Policy," The Institute for International Integration Studies Discussion Paper Series iiisdp81, IIIS. [Downloadable!]
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  3. Francois, Joseph & Rojas-Romagosa, Hugo, 2005. "Equity, welfare, and the setting of trade policy in general equilibrium," Policy Research Working Paper Series 3731, The World Bank. [Downloadable!]
  4. Luis San Vicente Portes, 2005. "On the Distributional Effects of Trade Policy: A Macroeconomic Perspective," Computing in Economics and Finance 2005 358, Society for Computational Economics. [Downloadable!]
  5. Joseph Francis Francois & Hugo ROJAS-ROMAGOSA, 2008. "Equity and International Trade," Economics working papers 2008-14, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
  6. J. Francois & H. Rojas-Romagosa, 2004. "Trade Policy and the Household Distribution of Income," Tinbergen Institute Discussion Papers 04-051/2, Tinbergen Institute, revised 15 Jun 2004. [Downloadable!]
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