Trade policy and redistribution when preferences are non-homothetic

Quy-Toan Do and Andrei Levchenko

Economics Letters, 2017, vol. 155, issue C, 92-95

Abstract: We compare redistribution through trade restrictions vs. domestic lump-sum transfers. When preferences are non-homothetic, even domestic lump-sum transfers affect relative prices. Thus, contrary to the conventional wisdom, domestic lump-sum transfers are not necessarily superior to distortionary trade policy. We develop this argument in the context of food export bans imposed by many developing countries in the late 2000s.

Keywords: Trade restrictions; Redistribution; Non-homothetic preferences (search for similar items in EconPapers)
JEL-codes: F13 O24 Q17 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Trade Policy and Redistribution when Preferences are Non-Homothetic (2017)
Working Paper: Trade Policy and Redistribution when Preferences are Non-Homothetic (2017)
Working Paper: Trade Policy and Redistribution when Preferences are Non-Homothetic (2017)
Working Paper: Trade policy and redistribution when preferences are non-homothetic (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:155:y:2017:i:c:p:92-95

DOI: 10.1016/j.econlet.2017.03.007

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