Tariff-Tax Reforms and Market Access
University of Tuebingen; CESifo (Center for Economic Studies and Ifo Institute)
Copenhagen Business School - Department of Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)
CEPR Discussion Paper No. 5889
Reducing tariffs and increasing consumption taxes is a standard IMF advice to countries that want to open up their economy without hurting government finances. Indeed, theoretical analysis of such a tariff-tax reform shows an unambiguous increase in welfare and government revenues. The present paper examines whether the country that implements such a reform ends up opening up its markets to international trade, i.e. whether its market access improves. It is shown that this is not necessarily so. We also show that, comparing to the reform of only tariffs, the tariff-tax reform is a less efficient proposal to follow both as far as it concerns market access and welfare.
Number of Pages in PDF File: 15
Keywords: Market access, tariff reform, consumption tax reform
JEL Classification: F13, H20working papers series
Date posted: December 28, 2006
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