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Trade Policy and Redistribution when Preferences are Non-Homothetic

Quy-Toan Do () and Andrei Levchenko

No 23237, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: F13 O24 Q17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2017-03
Note: ITI
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Published as Do, Quy-Toan & Levchenko, Andrei A., 2017. "Trade policy and redistribution when preferences are non-homothetic," Economics Letters, Elsevier, vol. 155(C), pages 92-95.

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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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