Wedges: Distribution, Distortions, and Market Integration
No 11980, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This paper proposes a stylized model of policy determination and imperfect international integration. A policy wedge aims to correct laissez-faire market imperfections and/or redistribute welfare across heterogeneous agents. Policy is subject to both race-to-the-bottom and beggar-thy-neighbor forces if the country's politico-economic equilibrium interacts with the rest of the world. Variation of international market wedges induces patterns of country-specific regulation and deregulation that depend on political and structural features in non-obvious, intuitive, and empirically realistic ways.
Keywords: Capital mobility.; Policy competition (search for similar items in EconPapers)
JEL-codes: D33 F02 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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