Trade Policy and Redistribution When Preferences are Non-Homothetic
This paper compares redistribution through trade restrictions versus 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...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/122941489496628184/Trade-policy-and-redistribution-when-preferences-are-non-homothetic http://hdl.handle.net/10986/26346 |
| Summary: | This paper compares redistribution
through trade restrictions versus 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. The paper develops this argument in the
context of the food export bans imposed by many developing
countries in the late 2000s. |
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