Equity and Trade Policy
We develop a dual approach to analyzing general equilibrium relationships between trade policy and household (as distinct from functional) income distribution, highlighting how general equilibrium distributional aspects of social welfare related to import protection may be examined alongside corresponding efficiency aspects in a dual framework. This includes the introduction of a social welfare function into the dual GE system that is explicitly separable between mean income and income dispersion. This then follows through to the government ob jective function. For government, this is manifested not only in special interest politics, but also through the direct impact of inequality on a governmentÕs ob jective function. We find that equity considerations may serve to counter lobbying interests in both capital-rich and capital-poor countries, though with an opposite marginal impact on the final policy outcome. We also identify a protectionist bias on the part of welfare maximizing governments in capital-rich countries. Our dual framework also offers a possible empirical framework for decomposition of policy-induced price changes into household inequality for a broad class of models.
|Date of creation:||May 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.i4ide.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sen, Amartya, 1974. "Informational bases of alternative welfare approaches : Aggregation and income distribution," Journal of Public Economics, Elsevier, vol. 3(4), pages 387-403, November.
- J. Francois & H. Rojas-Romagosa, 2004.
"Trade Policy and the Household Distribution of Income,"
Tinbergen Institute Discussion Papers
04-051/2, Tinbergen Institute, revised 15 Jun 2004.
- Francois, Joseph & Rojas-Romagosa, Hugo, 2004. "Trade Policy and the Household Distribution of Income," CEPR Discussion Papers 4436, C.E.P.R. Discussion Papers.
- Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
- Helpman, Elhanan, 1995.
"Politics and Trade Policy,"
CEPR Discussion Papers
1269, C.E.P.R. Discussion Papers.
- John C. Harsanyi, 1953. "Cardinal Utility in Welfare Economics and in the Theory of Risk-taking," Journal of Political Economy, University of Chicago Press, vol. 61, pages 434.
- Antonio Spilimbergo & Juan Luis Londoño & Miguel Székely, 1997.
"Income Distribution, Factor Endowments, and Trade Openness,"
Research Department Publications
4088, Inter-American Development Bank, Research Department.
- Spilimbergo, Antonio & Londono, Juan Luis & Szekely, Miguel, 1999. "Income distribution, factor endowments, and trade openness," Journal of Development Economics, Elsevier, vol. 59(1), pages 77-101, June.
- Matthew Higgins & Jeffrey G. Williamson, 1999.
"Explaining Inequality the World Round: Cohort Size, Kuznets Curves, andOpenness,"
NBER Working Papers
7224, National Bureau of Economic Research, Inc.
- Matthew Higgins & Jeffrey G. Williamson, 1999. "Explaining inequality the world round: cohort size, Kuznets curves, and openness," Staff Reports 79, Federal Reserve Bank of New York.
- Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
- J. David Richardson, 1995. "Income Inequality and Trade: How to Think, What to Conclude," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 33-55, Summer.
- John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63, pages 309.
- Galor, Oded, 1994. "Tariffs, Income Distribution and Welfare in a Small Overlapping-Generations Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 173-92, February.
- Joseph Francois & Hugo Rojas-Romagosa, 2005.
"Household Inequality, Welfare, and the Setting of Trade Policy,"
The Institute for International Integration Studies Discussion Paper Series
- Francois, Joseph & Rojas-Romagosa, Hugo, 2004. "Household Inequality, Welfare and the Setting of Trade Policy," CEPR Discussion Papers 4624, C.E.P.R. Discussion Papers.
- Joseph Francois & Hugo Rojas-Romagosa, 2004. "Household Inequality, Welfare, and the Setting of Trade Policy," Tinbergen Institute Discussion Papers 04-086/2, Tinbergen Institute.
- Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198292975, March.
- Bourguignon, F. & Morrisson, C., 1990.
"Income distribution, development and foreign trade : A cross-sectional analysis,"
European Economic Review,
Elsevier, vol. 34(6), pages 1113-1132, September.
- Bourguignon, F. & Morrisson, C., 1989. "Income Distribution, Development and Foreign Trade: A Cross-Sectional Analysis," DELTA Working Papers 89-05, DELTA (Ecole normale supérieure).
- Fernandez, Raquel & Rodrik, Dani, 1991. "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty," American Economic Review, American Economic Association, vol. 81(5), pages 1146-55, December.
- Baldwin, Robert E, 1989. "The Political Economy of Trade Policy," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 119-35, Fall.
- Ronald W. Jones, 1965. "The Structure of Simple General Equilibrium Models," Journal of Political Economy, University of Chicago Press, vol. 73, pages 557.
- 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.
- Dutt, Pushan & Mitra, Devashish, 2002. "Endogenous trade policy through majority voting: an empirical investigation," Journal of International Economics, Elsevier, vol. 58(1), pages 107-133, October.
When requesting a correction, please mention this item's handle: RePEc:lnz:wpaper:20070501. 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: (iide webmaster)
If references are entirely missing, you can add them using this form.