Trade Policy and Redistribution When Preferences are Non-Homothetic
15 Pages Posted: 19 Mar 2017 Last revised: 30 Jun 2023
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Trade Policy and Redistribution When Preferences are Non-Homothetic
NBER Working Paper No. w23237
Number of pages: 15
Posted: 19 Mar 2017
Last Revised: 30 Jun 2023
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Trade Policy and Redistribution When Preferences are Non-Homothetic
CEPR Discussion Paper No. DP11890
Number of pages: 17
Posted: 16 Mar 2017
Date Written: March 2017
Abstract
We compare redistribution through trade restrictions vs. 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. We develop this argument in the context of food export bans imposed by many developing countries in the late 2000s.
Suggested Citation: Suggested Citation
Do, Quy Toan and Levchenko, Andrei A., Trade Policy and Redistribution When Preferences are Non-Homothetic (March 2017). NBER Working Paper No. w23237, Available at SSRN: https://ssrn.com/abstract=2935442
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