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Optimal Trade Policies for a Small Open Economy

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  • Choi, E Kwan
  • Beladi, Hamid

Abstract

This paper investigates optimal trade policies for a small open economy with unemployment. When factor prices are rigid, random foreign prices result in random unemployment of resources. The ranking of second-best policies is investigated. If the marginal propensity to consume the importable is positive and nonincreasing in income, the optimal composite tariff dominates the optimal target price, which in turn dominates the optimal quota. Copyright 1993 by The London School of Economics and Political Science.

Suggested Citation

  • Choi, E Kwan & Beladi, Hamid, 1993. "Optimal Trade Policies for a Small Open Economy," Economica, London School of Economics and Political Science, vol. 60(240), pages 475-486, November.
  • Handle: RePEc:bla:econom:v:60:y:1993:i:240:p:475-86
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    Cited by:

    1. Yoshiyasu Ono, 2010. "Trade Policy, Exchange Rate Adjustment and Unemployment," Chapters,in: Globalization and Economic Integration, chapter 7 Edward Elgar Publishing.
    2. Choi, E. Kwan, 2002. "Trade and the adoption of a universal language," International Review of Economics & Finance, Elsevier, vol. 11(3), pages 265-275.
    3. Chen, Jiong, 1994. "The Harris-Todaro model of labor migration and its commercial policy implications," ISU General Staff Papers 1994010108000011587, Iowa State University, Department of Economics.
    4. Chi-Chur Chao & Eden S. H. Yu, 2014. "The Impact of Export-Share Requirements Under Production Uncertainty," World Scientific Book Chapters,in: TRADE-RELATED INVESTMENT MEASURES Theory and Applications, chapter 7, pages 107-123 World Scientific Publishing Co. Pte. Ltd..
    5. Kwan Choi, E. & Beladi, Hamid, 1998. "Welfare reducing trade and optimal trade policy," Japan and the World Economy, Elsevier, vol. 10(2), pages 187-198, April.
    6. Choi, Eun Kwan & Chen, Jiong, 1997. "Employment risk and optimal trade policies," Discussion Papers, Series II 338, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    7. Yoshiyasu Ono, 2006. "Protective Trade Policies 'Reduce' Employment: A Dynamic Optimization Approach," ISER Discussion Paper 0659, Institute of Social and Economic Research, Osaka University.
    8. Chao, Chi-Chur & Yu, Eden S.H., 2007. "Trade liberalization, foreign ownership, and the environment in a small open economy," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 471-477.
    9. Yoshiyasu Ono, 2014. "International Economic Interdependence and Exchange-rate Adjustment under Persistent Stagnation," The Japanese Economic Review, Japanese Economic Association, vol. 65(1), pages 70-92, March.

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