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

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  • Galor, Oded

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.

Suggested Citation

  • Galor, Oded, 1994. "Tariffs, Income Distribution and Welfare in a Small Overlapping-Generations Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 173-192, February.
    • Handle: RePEc:ier:iecrev:v:35:y:1994:i:1:p:173-92
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    Cited by:

    1. Leonid Azarnert, 2014. "Agricultural Exports, Tariffs and Growth," Open Economies Review, Springer, vol. 25(4), pages 797-807, September.
    2. Leon Bettendorf & Ben Heijdra, 2001. "Intergenerational and International Welfare Leakages of a Product Subsidy in a Small Open Economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(5), pages 705-729, November.
    3. Joseph Francois & Hugo Rojas-Romagosa, 2007. "Equity and Trade Policy," IIDE Discussion Papers 20070501, Institue for International and Development Economics.
    4. Long, N.V. & Wong, K.Y., 1996. "Endogenous Growth and International Trade: A Survey," Working Papers 96-07, University of Washington, Department of Economics.
    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.
    6. MacDonald, Stephen & Pan, Suwen & Somwaru, Agapi & Tuan, Francis C., 2004. "China'S Role In World Cotton And Textile Markets," 2004 Annual meeting, August 1-4, Denver, CO 20054, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Osang, Thomas & Pereira, Alfredo, 1996. "Import tariffs and growth in a small open economy," Journal of Public Economics, Elsevier, vol. 60(1), pages 45-71, April.
    8. Francois, J. & Rojas-Romagosa, H., 2004. "Trade Policy and the Household Distribution of Income," Conference papers 331245, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Francois, Joseph & Rojas-Romagosa, Hugo, 2004. "Household Inequality, Welfare and the Setting of Trade Policy," CEPR Discussion Papers 4624, C.E.P.R. Discussion Papers.
    10. 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.
    11. Bettendorf, Leon J.H. & Heijdra, Ben J., 1999. "Intergenerational and international welfare leakages of a tariff in a small open economy," CCSO Working Papers 199910, University of Groningen, CCSO Centre for Economic Research.
    12. Slaibi, Ahmad & Kyle, Steven C., 2006. "Macroeconomic Impact of Mineral Revenues on General Market Equilibrium and Poverty Alleviation in Sub-Saharan Africa," Working Papers 127059, Cornell University, Department of Applied Economics and Management.
    13. Gokcekus, Omer & Tower, Edward, 1998. "Does Trade Liberalization Benefit Young and Old Alike?," Review of International Economics, Wiley Blackwell, vol. 6(1), pages 50-58, February.
    14. Cremers, Emily T., 2005. "Intergenerational Welfare And Trade," Macroeconomic Dynamics, Cambridge University Press, vol. 9(5), pages 585-611, November.
    15. Baldwin, Richard E, 1992. "Measurable Dynamic Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 162-174, February.
    16. Francois, Joseph & Rojas-Romagosa, Hugo, 2011. "Household inequality, social welfare, and trade," Journal of Development Economics, Elsevier, vol. 96(2), pages 422-431, November.
    17. Leon Bettendorf & Ben Heijdra, 2001. "Intergenerational welfare effects of a tariff under monopolistic competition," Journal of Economics, Springer, vol. 73(3), pages 313-346, October.
    18. Azarnert, Leonid V., 2018. "Trade, Luxury Goods, And A Growth-Enhancing Tariff," Macroeconomic Dynamics, Cambridge University Press, vol. 22(6), pages 1462-1474, September.
    19. 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.
    20. Dinopoulos, Elias & Segerstrom, Paul, 1999. "The dynamic effects of contingent tariffs," Journal of International Economics, Elsevier, vol. 47(1), pages 191-222, February.
    21. Cremers, Emily T., 2006. "Dynamic efficiency in the two-sector overlapping generations model," Journal of Economic Dynamics and Control, Elsevier, vol. 30(11), pages 1915-1936, November.
    22. Slaibi, Ahmad & Kyle, Steven C., 2006. "Oil Windfalls in Sub-Saharan Africa: Economic Implications for Local Production, Wages, and Market Equilibrium," Working Papers 179867, Cornell University, Department of Applied Economics and Management.
    23. Shannon K. Mitchell, 1995. "The Political Economy Of Quota Rents In A Dynamic International Trade Model," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 243-261, November.
    24. Dinopoulos, Elias & Syropoulos, Constantinos, 1997. "Tariffs and Schumpeterian growth," Journal of International Economics, Elsevier, vol. 42(3-4), pages 425-452, May.

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