Four Observations on Modern International Commercial Policy under Floating Exchange Rates
This paper describes the essential similarity between "modern" commercial policy, with its rent-like revenues, and capital transfers. Import barriers are shown to have consequently ambiguous effects on nominal and real exchange rates. The paper also examines some important supply-side welfare Costs and consequences of import barriers through their influence on current asset prices and future capital formation. The model on which the observations are based is an aggregated fixed-endowment, full-employment, general-equilibrium model similar to those used in the pure theory of international trade, with financial capital and foreign exchange markets that are integrated in a manner consistent with the asset/portfolio-balance approach to exchange rates. The model is empirically calibrated to reflect the U.S. and the rest of the world in the early 1980's. In this empirical stylization, U.S. import barriers are shown (1) to reduce national consumption possibilities more significantly than is usually thought to be the case; (ii) to discourage U.S. physical capital formation; and (iii) to have significant yet variable effects on exchange rates, where the variability depends on the distribution between the U.S. and the rest of the world of the rent-like revenues implicit in the import barriers. It is notable that the more favorable this distribution to the U.S. the larger is the dollar depreciation caused by import barriers.
|Date of creation:||Jul 1981|
|Date of revision:|
|Publication status:||published as Richardson, J. David. "Four Observations on Modern International Commercial Policy under Floating Exchange Rates." Monetary REgimes and Protectionism, Carnegie-Rochester Conference Series on Public Policy, edited by Kar; Brunner and Allan H. Meltzer, Vol. 16. Amsterdam: North-Holland, 1982.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.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.:
- Russell S. Boyer, 1977. "Commercial Policy under Alternative Exchange Rate Regimes," Canadian Journal of Economics, Canadian Economics Association, vol. 10(2), pages 218-32, May.
- Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
- Fischer, Stanley, 1979. "Anticipations and the Nonneutrality of Money," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 225-52, April.
- Raymond W. Goldsmith, 1962. "The National Wealth of the United States in the Postwar Period," NBER Books, National Bureau of Economic Research, Inc, number gold62-1.
- Wilson, Charles A, 1979. "Anticipated Shocks and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 87(3), pages 639-47, June.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0715. 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: ()
If references are entirely missing, you can add them using this form.