Wedges: Distribution, Distortions, and Market Integration
No 6627, CESifo Working Paper Series from CESifo Group Munich
This paper proposes a stylized model of policy determination and imperfect international integration. A country-specific policy wedge corrects labor market imperfections and/or redistributes welfare across differently wealthy agents. Capital market integration with the rest of the world, indexed by another wedge, shapes the politico-economic equilibrium policy through race-to-the-bottom and beggar-thy-neighbor channels. The policy and welfare implications of tighter international integration depend in sharp and empirically realistic ways on country-specific political and structural features.
Keywords: policy competition; capital mobility (search for similar items in EconPapers)
JEL-codes: F02 D33 J08 (search for similar items in EconPapers)
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Journal Article: Wedges: Distribution, distortions, and market integration (2019)
Working Paper: Wedges: Distribution, Distortions, and Market Integration (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6627
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