Revenue Neutral Trade Reform with Many Households, Quotas and Tariffs

38 Pages Posted: 12 Jul 2000

See all articles by James E. Anderson

James E. Anderson

Boston College - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 1997

Abstract

Government budget balance forces the endogenous use of distortionary tax instruments" when an exogenous reform is implemented. The aggregate efficiency of such reforms is based" on comparisons of simple summary measures of the Marginal Cost of Funds of the various tariff" or quota changes with the Marginal Cost of Funds of the alternative taxes Benefit of Government supplied goods. The aggregate efficiency of tariff liberalization is" dubious, while quota liberalization is more likely to be efficient. Social welfare rises with" aggregate efficiency unless distribution effects are perverse. Plausible sufficient conditions for" non-perverse distributional effects are provided. The results frame a diagnostic method for" sensitivity analysis in evaluations of trade and tax policies.

Suggested Citation

Anderson, James E., Revenue Neutral Trade Reform with Many Households, Quotas and Tariffs (September 1997). NBER Working Paper No. w6181. Available at SSRN: https://ssrn.com/abstract=225939

James E. Anderson (Contact Author)

Boston College - Department of Economics ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-3691 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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