Traded Goods, Tax and Intermediation - the Role of Corrupt Nontraded Sector

Biswajit Mandal

MPRA Paper from University Library of Munich, Germany

Abstract: This paper uses a Heckscher-Ohlin nugget framework with both traded and non-traded goods. Our motive is to investigate the effects of corruption and tax cut. We assume only the non-traded sector to be corruption affected. We argue that a fall in the degree of corruption surprisingly increases number of intermediators while tax change has no effect on it. But the size of the intermediation activities expands in both the cases. Low corruption diminishes the exportable production and raises importable production while a tax cut does not have any effect. The welfare implication is ambiguous in case of a decrease in cost of corruption. A tax cut, however, raises the welfare unambiguously.

Keywords: International Trade; Corruption; General Equilibrium; Welfare. (search for similar items in EconPapers)
JEL-codes: D5 D6 D73 F1 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:56525

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