Revenue Neutral Trade Reform with Many Households, Quotas and Tariffs

James Anderson

No 626, Seminar Papers from Stockholm University, Institute for International Economic Studies

Abstract: Government budget balance forces the endogenous use of distortionary tax instruments when an exogenous reform is implemented. The aggregate efficiency of such reforms is based on comparisons of simple summary measures of the Marginal Cost of Funds of the various tariff or quota changes with the Marginal Cost of Funds of the alternative taxes, or of the Marginal Benefit of Government supplied goods. The aggregate efficiency of tariff liberalization is dubious, while quota liberalization is more likely to be efficient. Social welfare rises with aggregate efficiency unless distribution effects are perverse. Plausible sufficient conditions for non-perverse distributional effects are provided. The results frame a diagnostic method for sensitivity analysis in evaluations of trade and tax policies.

Keywords: aggregate efficiency; tariff liberalization; quota liberalization; Social welfare; non-perverse distributional effects (search for similar items in EconPapers)
JEL-codes: F13 H21 (search for similar items in EconPapers)
Pages: 35 pages
Date: 1997-10-31
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Forthcoming in Review of International Economics, 2002.

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Related works:
Working Paper: Revenue Neutral Trade Reform With Many Households, Quotas and Tariffs (1997)
Working Paper: Revenue Neutral Trade Reform with Many Households, Quotas and Tariffs (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iiessp:0626

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