A Dynamic Optimal Trade Facilitation Policy

Nasreen Nawaz

The International Trade Journal, 2022, vol. 36, issue 2, 102-122

Abstract: The existing literature does not consider the efficiency losses on the adjustment path after a trade facilitation policy is adopted. After a trade facilitation measure, the cost of the foreign producer gets a downward jump, which affects imports, and the market gets out of equilibrium. The market supply and demand get adjusted over time until the post-policy equilibrium arrives. The adjustment of price is based on the lack of coordination among agents at the existing prices. An optimal trade facilitation policy subject to a cost constraint has been derived, which minimizes the efficiency losses on the adjustment path.

Date: 2022
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DOI: 10.1080/08853908.2020.1859021

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