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Equity, welfare, and the setting of trade policy in general equilibrium

Author

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  • Francois, Joseph
  • Rojas-Romagosa, Hugo

Abstract

The authors analyzegeneral equilibrium relationships between trade policy and the household distribution of income, decomposing social welfare into real income level and variance components and emphasizing Gini and Atkinson indexes. They embed these inequality-adjusted social welfare functions in a general equilibrium structure mapping from tariff protection to household inequality. This yields predictions regarding the linkages between trade protection, country characteristics, and inequality within a broad general equilibrium framework. In addition, the authors can separate the efficiency and equity effects of tariffs on welfare. They then examine endogenous tariff formation when policymakers care about both equity and special interests.

Suggested Citation

  • 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.
    • Handle: RePEc:wbk:wbrwps:3731
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    References listed on IDEAS

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    Cited by:

    1. Joseph Francois & Hugo Rojas-Romagosa, 2007. "Equity and Trade Policy," IIDE Discussion Papers 20070501, Institue for International and Development Economics.
    2. Francois, Joseph & Rojas-Romagosa, Hugo, 2011. "Household inequality, social welfare, and trade," Journal of Development Economics, Elsevier, vol. 96(2), pages 422-431, November.
    3. Joseph Francis Francois & Hugo ROJAS-ROMAGOSA, 2008. "Equity and International Trade," Economics working papers 2008-14, Department of Economics, Johannes Kepler University Linz, Austria.
    4. Acharya, Sanjaya & Cohen, Solomon, 2008. "Trade liberalisation and household welfare in Nepal," Journal of Policy Modeling, Elsevier, vol. 30(6), pages 1057-1060.

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    Keywords

    Economic Theory&Research; Inequality; Free Trade; Poverty Impact Evaluation; Investment and Investment Climate;
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