Tariffs in an Economy with Incomplete Markets and Unemployment
AbstractThis paper examines the optimal labor contract in a small open economy with incomplete markets under international price uncertainty. The effect on employment, wages, and profits of different realizations of the state of nature is studied and agents' preferences concerning the implementation of a tariff are determined. The implicit contract equilibrium is shown to be constrained Pareto optimal; unanticipated tariff policy cannot be Pareto improving over free trade.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2705.
Date of creation: Sep 1988
Date of revision:
Publication status: published as "Terms of Trade Uncertainty, Incomplete markets, and Unemployment," International Economic Review, 33, pp. 881-894, Noveber, 1992
Note: ITI IFM
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NBER Working Papers
0797, National Bureau of Economic Research, Inc.
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- Lapan, Harvey E, 1976. "International Trade, Factor Market Distortions, and the Optimal Dynamic Subsidy," American Economic Review, American Economic Association, vol. 66(3), pages 335-46, June.
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"Designing Policies To Open Trade,"
349, California Davis - Institute of Governmental Affairs.
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