Welfare reducing trade and optimal trade policy

Welfare Reducing Trade and Optimal Trade Policy

This paper shows that free trade reduces the welfare of a small country with unemployment unless the free trade price if the importable falls below the autarky equivalent price. A decline in the price of the importable from the autarky level not only improves the terms of trade but also reduces employment and production in the importable sector. A numerical example illustrates that the autarky ...

Strategic Interaction, Trade Policy, and National Welfare

Trade Policy , Income Risk , and Welfare ∗

This paper studies empirically the relationship between trade policy and individual income risk faced by workers. The analysis proceeds in three steps. First, longitudinal data on workers are used to estimate time-varying individual income risk parameters in various manufacturing sectors. The estimated income risk parameters and data on trade barriers are then used to analyze the relationship b...

Outsourcing and Optimal Trade Policy

Outsourcing under incomplete contracts tends to generate too little investment that is specific to the bilateral relationship. In a model where there are otherwise no social motives for protection, we show that protection is helpful when the buyer trades customized inputs with a specialized domestic supplier while also buying standardized inputs from the world market. In that case, a tariff wor...

South African Trade Policy Matters : Trade Performance and Trade Policy

South African trade policy has exerted a major influence on the composition and aggregate growth of trade. In the Apartheid period, trade protection seriously impeded both exports and imports, and the economy depended on favorable global commodity price trends to avoid running into an external constraint. South Africa developed a comparative advantage in capital-intensive primary and manufactur...