Domestic Distortions and International Trade

James Anderson and J. Peter Neary

No 786, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In this paper we develop techniques for measuring the trade policy equivalent of domestic distortions, using a distance function approach. Our measure, the Trade Restrictiveness Index, is shown to equal the uniform tariff which is welfare-equivalent to a given pattern of domestic taxes and subsidies. We extend the Index to incorporate taxes on non-traded goods and factor markets and illustrate its operationality with an application to liberalization in Mexican agriculture. We conclude that our Index has considerable potential in empirical work and as an aid to trade negotiators.

Keywords: Consumer Subsidy; Domestic Distortions; Producer Subsidy; Trade Policy; Trade Restrictiveness Index (search for similar items in EconPapers)
JEL-codes: F10 F13 (search for similar items in EconPapers)
Date: 1993-06
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Domestic Distortions and International Trade (1995)
Working Paper: Domestic Distortions and International Trade (1993)
Working Paper: Domestic distortions and international trade (1993)
Working Paper: Domestic distortions and international trade (1992)
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