Revenue Neutral Trade Reform with Many Households, Quotas and Tariffs
AbstractGovernment budget balance forces the endogenous use of distortionary tax instruments when an exogenous reform is implemented. The aggregate efficiency of such reforms is based on comparisons of simple summary measures of the Marginal Cost of Funds of the various tariff or quota changes with the Marginal Cost of Funds of the alternative taxes, or of the Marginal Benefit of Government supplied goods. The aggregate efficiency of tariff liberalization is dubious, while quota liberalization is more likely to be efficient. Social welfare rises with aggregate efficiency unless distribution effects are perverse. Plausible sufficient conditions for non-perverse distributional effects are provided. The results frame a diagnostic method for sensitivity analysis in evaluations of trade and tax policies.
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Bibliographic InfoPaper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 626.
Length: 35 pages
Date of creation: 31 Oct 1997
Date of revision:
Publication status: Forthcoming in Review of International Economics, 2002.
Contact details of provider:
Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
Web page: http://www.iies.su.se/
More information through EDIRC
aggregate efficiency; tariff liberalization; quota liberalization; Social welfare; non-perverse distributional effects;
Other versions of this item:
- James E. Anderson, 1997. "Revenue Neutral Trade Reform with Many Households, Quotas and Tariffs," NBER Working Papers 6181, National Bureau of Economic Research, Inc.
- Anderson, J-E, 1997. "Revenue Neutral Trade Reform With Many Households, Quotas and Tariffs," Papers 626, Stockholm - International Economic Studies.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
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