Trade and Tax Reforms in a Cash-in-Advance Economy
AbstractWe examine the effects of both tariff-only and coordinated trade-tax reforms on market access, government revenue and welfare for a small monetary economy, under the assumption that a certain fraction of purchases of each good must be ?nanced with cash held in advance. We show that if the cash requirement ratio in the exportable sector is greater than that in the importable then, contrary to previous results: i) a uniform radial reduction of tariffs has ambiguous effects on both welfare and market access, ii) tariff and consumption tax reforms that leave consumer prices unchanged may be more efficient in improving market access and welfare than a reform that involves only tariffs and iii) export and production tax reforms that keep producer prices unchanged may be welfare deteriorating.
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Bibliographic InfoPaper provided by Department of Economics, University of Macedonia in its series Discussion Paper Series with number 2010_07.
Date of creation: Apr 2010
Date of revision: Apr 2010
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Web page: http://www.uom.gr/index.php?tmima=3
Tariff and Tax Reforms; Export and Production Tax Reform; Cash-in-Advance Constraint.;
Other versions of this item:
- Theodore Palivos & Nikos Tsakiris, 2011. "Trade and Tax Reforms in a Cash-in-Advance Economy," Southern Economic Journal, Southern Economic Association, vol. 77(4), pages 1014-1032, April.
- Theodore Palivos & Nikos Tsakiris, 2009. "Trade and Tax Reforms in a Cash-in-Advance Economy," University of Cyprus Working Papers in Economics 1-2009, University of Cyprus Department of Economics.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-02 (All new papers)
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