17,067 research outputs found
Welfare vs. Market Access: The Implications of Tariff Structure for Tariff Reform
We show that the effects of tariff changes on welfare and import volume can be fully characterized by their effects on the generalized mean and variance of the tariff distribution. Using these tools, we derive new results for welfare- and market-access-improving tariff changes, which imply two 'cones of liberalization' in price space. Because welfare is negatively but import volume positively related to the generalized variance, the cones do not intersect, which poses a dilemma for trade policy reform. Finally, we show that generalized and trade-weighted moments are mutually proportional when the trade expenditure function is CES.
Domestic distortions and international trade
Trade is affected not only by taxes and subsidies that affect producers and consumers of goods, but also, indirectly, by taxes and subsidies that affect nontraded goods or factors of production. The authors show how the Trade Restrictiveness Index (TRI) may be extended to incorporate these types of distortions. Again, the value of the TRI gives the equiproportionate change in the prices of traded goods, which would compensate for a given change in all distortions, both in traded and nontraded goods and in factor markets. The authors, who developed the theory of the TRI, show how to apply it in practice, drawing on a larger study by Anderson and Bannister of changes in Mexican agricultural policy between 1985 and 1989. Adapting the TRI to a partial equilibrium context allows existing estimates of key demand and supply elasticities to be incorporated into the Index; and the basic formula is adapted to take account of some special features of Mexican agricultural markets. The TRI shows a great increase in restrictiveness in 1986 and especially 1987, followed by major reductions in restrictiveness in 1988 and 1989. The cumulative effect: a 49.9 percent fall in trade restrictiveness over the four years. The major, although not the only, source of changes in trade restrictiveness were changes in producer subsidies, especially for maize. These trends are not captured by changes in indices for consumer and producer subsidy equivalents, which the authors also present. Indeed, in a number of years at least one of the ad hoc indices changed in the opposite direction to the change in the corresponding welfare-based index.Access to Markets,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Markets and Market Access,Environmental Economics&Policies,Economic Theory&Research
Welfare versus Market Access - The Implications of Tariff Structure for Tariff Reform
We show that the effects of tariff changes on welfare and import volume can be fully characterised by their effects on the generalised mean and variance of the tariff distribution. Using these tools, we derive new results for welfare- and market-access-improving tariff changes, which imply two "cones of liberalisation" in price space. Because welfare is negatively but import volume positively related to the generalised variance, the cones do not intersect, which poses a dilemma for trade policy reform. Finally, we show that generalised and trade-weighted moments are mutually proportional when the trade expenditure function is CES.Concertina rule; Market access; Piecemeal policy reform; Tariff moments; Uniform tariff reductions
A new approach to evaluating trade policy
The authors introduce a new measure, the Trade Restrictiveness Index, to measure the restrictiveness of a system of trade protection. They propose an alternative to the commonly used ad hoc indexes of trade restrictiveness, such as the trade-weighted average tariff. That measure has no welfare-theoretic basis and can be highly misleading, in practice. For example, the complete exclusion of trade in a commodity would usually lower the index, because its trade weight would fall to zero. The authors show that their proposed index is soundly based in standard welfare economics. When trade is restricted by tariffs only, the Trade Restrictiveness Index equals the uniform tariff, which would be equivalent to the existing system of tariffs in the sense of yielding the same level of aggregate welfare. But tariffs have declined in importance in recent years as a means of restricting trade, so the measure must also be able to take account of quantitative restrictions on trade. Where quotas are the only form of restriction, this is easy: the Index equals the equiproportionate reduction in permitted import volumes that is welfare-equivalent to the initial structure of quotas. When both quotas and tariffs are present, the Index can be defined as the uniform tariff factor (one plus the uniform tariff) and uniform import reduction factor which would yield the same level of welfare as the initial system of trade restrictions. The authors show how this can be formulated, noting that if a single good is subject to both a binding quota and a tariff, it should be viewed as quota-constrained - the tariff serves merely to ensure that some of the rents accrue to the importing country. These theoretical derivations permit a major synthesis of the theory of protection and suggest how the results of computable general equilibrium models might be presented to make them internationally and intertemporally comparable. But in most cases such a model is not available and, even if it were, it would not be sufficiently disaggregated to deal with a complicated system of trade protection. So the authors present some empirical short-cuts that can be adopted for estimating changes in the Index. Chief among these is the assumption that the goods under consideration are separable from others in an appropriate general-equilibrium sense. This can provide a rigorous foundation for a form of partial-equilibrium analysis (the consideration of a subset of markets in an economy). They also show how the Trade Restrictiveness Index can be adapted to allow for different forms of rent sharing and for a country's ability to influence its terms of trade. Applying these empirical methods to exports of textiles and apparel from Hong Kong to the United States, the authors find that the protective system becomes more restrictive for both countries over the seven years considered (1982-88). Increased trade restrictiveness does not necessarily mean that quotas have been tightened. When there is economic growth, constant or even rising import quotas might still amount to a tightening of protection. Results based on the trade-weighted average of"tariff equivalents"(the gaps between Hong Kong and U.S. prices) diverge significantly from those of the Trade Restrictiveness Index. The two measures have opposite implications for the change in trade restrictiveness for two-thirds of the observations.Environmental Economics&Policies,Trade Policy,Transport and Trade Logistics,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT
The Mercantilist Index of Trade Policy
We introduce an index of trade policy restrictiveness defined as the uniform tariff which maintains the same trade volume as a given tariff/quota structure. Our index overcomes the problems of the trade-weighted average tariff - it avoids substitution bias, correctly accounts for general equilibrium transfers, and takes import volume rather than welfare as benchmark. Empirical applications to international cross-section and time-series comparisons of trade policy confirm our theoretical results - trade-weighted average tariffs generally underestimate the true height of tariffs as measured by the trade-volume-equivalent index; this in turn always underestimates the welfare-equivalent index.International trade policy; tariffs; quotas; Trade Restrictiveness Index; trade liberalisation
Uniformly exponential growth and mapping class groups of surfaces
We show that the mapping class group of an orientable finite type surface has
uniformly exponential growth, as well as various closely related groups. This
provides further evidence that mapping class groups may be linear.Comment: 6 pages, no figure
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