Costly Trade Liberalizations: Durable Goods and Capital Mobility
The social costs of a temporary liberalization policy in the context of an economy with infinitely lived individuals and no intertemporal consumption substitution are studied. Importable goods, however, can be stored, and storability is the central source of distortions. Possible welfare costs of the induced inventory accumulation are shown to be significant. It is also argued that temporariness is formally equivalent to "lack of credibility." Because international capital mobility is the vehicle that magnifies these distortions, the results suggest that an optimal trade liberalization without full credibility could call for controls on international capital mobility.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 35 (1988)
Issue (Month): 3 (September)
|Contact details of provider:|| Web page: http://www.palgrave-journals.com/ |
|Order Information:|| Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK|
Web: http://www.palgrave-journals.com/pal/subscribe/index.html Email:
When requesting a correction, please mention this item's handle: RePEc:pal:imfstp:v:35:y:1988:i:3:p:461-473. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Daniel Foley)
If references are entirely missing, you can add them using this form.