Green Policies in a Small Open Economy

Lans Bovenberg and Frederick (Rick) van der Ploeg

No 785, 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: Capital; Environmental Externalities; Excess Burden; Natural Resources; Public Abatement Employment; Small Open Economy (search for similar items in EconPapers)
JEL-codes: E60 H21 H41 Q28 (search for similar items in EconPapers)
Date: 1993-05
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Citations: View citations in EconPapers (8)

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Working Paper: Green policies in a small open economy (1994)
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