What Governments Maximize and Why: The View from Trade
McCombs School of Business, UT Austin
September 26, 2008
Policy making power enables governments to redistribute income to powerful interests in society. However, some governments exhibit greater concern for aggregate welfare than others. This government behavior may itself be endogenously determined by a number of economic, political and institutional factors. Trade policy, being fundamentally redistributive, provides a valuable context in which the welfare mindedness of governments may be empirically evaluated. This paper investigates quantitatively the welfare mindedness of governments and attempts to understand these political and institutional determinants of the differences in government behavior across countries.
Keywords: Redistribution, Political Economy, International Trade, Institutions
JEL Classification: F13
Date posted: September 30, 2008