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Trade Policy and Redistribution when Preferences are Non-Homothetic

Quy-Toan Do () and Andrei Levchenko

No 656, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: We compare redistribution through trade restrictions vs. domestic lump-sum transfers. When preferences are non-homothetic, even domestic lump-sum transfers affect relative prices. Thus, contrary to the conventional wisdom, domestic lump-sum transfers are not necessarily superior to distortionary trade policy. We develop this argument in the context of food export bans imposed by many developing countries in the late 2000s.

Keywords: trade restrictions; redistribution; non-homothetic preferences (search for similar items in EconPapers)
JEL-codes: F13 Q17 O24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2017-03-06
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http://www.fordschool.umich.edu/rsie/workingpapers/Papers651-675/r656.pdf

Related works:
Journal Article: Trade policy and redistribution when preferences are non-homothetic (2017) Downloads
Working Paper: Trade Policy and Redistribution when Preferences are Non-Homothetic (2017) Downloads
Working Paper: Trade Policy and Redistribution when Preferences are Non-Homothetic (2017) Downloads
Working Paper: Trade policy and redistribution when preferences are non-homothetic (2017) Downloads
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