Intersectoral Adjustment and Policy Intervention: the Importance of General Equilibrium Effects
AbstractWe model adjustment costs in a general equilibrium setting using a Ã¢â¬Åtransport sectorÃ¢â¬. This sector provides services needed to re-allocate a factor of production across wo 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 governmentÃ¢â¬â¢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.
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Bibliographic InfoPaper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 893R.
Length: 39 pages
Date of creation: 2002
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Postal: University of California, Giannini Foundation of Agricultural Economics Library, 248 Giannini Hall #3310, Berkeley CA 94720-3310
Other versions of this item:
- Larry Karp & Thierry Paul, 2005. "Intersectoral Adjustment and Policy Intervention: the Importance of General-Equilibrium Effects," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 330-355, 05.
- 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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