Multiple equilibria and protectionism

Detalhes bibliográficos
Autor(a) principal: Terra, Maria Cristina T.
Data de Publicação: 1994
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
Texto Completo: http://hdl.handle.net/10438/12381
Resumo: In a nonnative approach, I analyze trade policies when the industrial sector genentes positive extemalities in production, and there are adjustments costs to changing production from one sector to the other. Protectionist trade policy can make workers intemalize the benetits from moving into the industrial sector, but it is a second best policy as it also causes consumption distortions. I show that if the govemment is able to fully commit to its tariff schedule for the future, the welfare maximizing policy is to maintain a positive tariff forever, even after all adjustment has already taken place . However, if the govemment is not able to commit at all, the only time consistent policy is zero tariff at any point in time. The time inconsistency of the full commitment policy is derived from the fact that in the model only production needs interference, and the production distortion is lagged one period with respect to the tariff wbile the consumption distortion is simultaneous to the tariff. In the intermediary case, i.e., when the government can commit for a limited period of time, the time consistent optimal tariff will be positive but lower than the 'full commitment' tariff. This result indicates that some institutions that have always been considered pure sources of inefficiency, such as protectionist lobbying, may in fact be welfare improving in some cases!
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spelling Terra, Maria Cristina T.Escolas::EPGEFGV2014-11-11T13:03:47Z2014-11-11T13:03:47Z1994-01-17http://hdl.handle.net/10438/12381In a nonnative approach, I analyze trade policies when the industrial sector genentes positive extemalities in production, and there are adjustments costs to changing production from one sector to the other. Protectionist trade policy can make workers intemalize the benetits from moving into the industrial sector, but it is a second best policy as it also causes consumption distortions. I show that if the govemment is able to fully commit to its tariff schedule for the future, the welfare maximizing policy is to maintain a positive tariff forever, even after all adjustment has already taken place . However, if the govemment is not able to commit at all, the only time consistent policy is zero tariff at any point in time. The time inconsistency of the full commitment policy is derived from the fact that in the model only production needs interference, and the production distortion is lagged one period with respect to the tariff wbile the consumption distortion is simultaneous to the tariff. In the intermediary case, i.e., when the government can commit for a limited period of time, the time consistent optimal tariff will be positive but lower than the 'full commitment' tariff. This result indicates that some institutions that have always been considered pure sources of inefficiency, such as protectionist lobbying, may in fact be welfare improving in some cases!engEscola de Pós-Graduação em Economia da FGVSeminários de pesquisa econômica da EPGETodo cuidado foi dispensado para respeitar os direitos autorais deste trabalho. Entretanto, caso esta obra aqui depositada seja protegida por direitos autorais externos a esta instituição, contamos com a compreensão do autor e solicitamos que o mesmo faça contato através do Fale Conosco para que possamos tomar as providências cabíveisinfo:eu-repo/semantics/openAccessMultiple equilibria and protectionisminfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleEconomiaProtecionismo e livre câmbioEquilíbrio econômicoreponame:Repositório Institucional do FGV (FGV Repositório Digital)instname:Fundação Getulio Vargas (FGV)instacron:FGVORIGINAL000089003.pdf000089003.pdfapplication/pdf1472840https://repositorio.fgv.br/bitstreams/eb6d127d-a499-4066-b0c3-1a0a91b189f1/download12afd2060b20461aaf7059c7e625fe39MD51LICENSElicense.txtlicense.txttext/plain; charset=utf-84707https://repositorio.fgv.br/bitstreams/b2f80851-5e52-4e12-bc28-d9bb853c2c13/downloaddfb340242cced38a6cca06c627998fa1MD52TEXT000089003.pdf.txt000089003.pdf.txtExtracted 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dc.title.eng.fl_str_mv Multiple equilibria and protectionism
title Multiple equilibria and protectionism
spellingShingle Multiple equilibria and protectionism
Terra, Maria Cristina T.
Economia
Protecionismo e livre câmbio
Equilíbrio econômico
title_short Multiple equilibria and protectionism
title_full Multiple equilibria and protectionism
title_fullStr Multiple equilibria and protectionism
title_full_unstemmed Multiple equilibria and protectionism
title_sort Multiple equilibria and protectionism
author Terra, Maria Cristina T.
author_facet Terra, Maria Cristina T.
author_role author
dc.contributor.unidadefgv.por.fl_str_mv Escolas::EPGE
dc.contributor.affiliation.none.fl_str_mv FGV
dc.contributor.author.fl_str_mv Terra, Maria Cristina T.
dc.subject.area.por.fl_str_mv Economia
topic Economia
Protecionismo e livre câmbio
Equilíbrio econômico
dc.subject.bibliodata.por.fl_str_mv Protecionismo e livre câmbio
Equilíbrio econômico
description In a nonnative approach, I analyze trade policies when the industrial sector genentes positive extemalities in production, and there are adjustments costs to changing production from one sector to the other. Protectionist trade policy can make workers intemalize the benetits from moving into the industrial sector, but it is a second best policy as it also causes consumption distortions. I show that if the govemment is able to fully commit to its tariff schedule for the future, the welfare maximizing policy is to maintain a positive tariff forever, even after all adjustment has already taken place . However, if the govemment is not able to commit at all, the only time consistent policy is zero tariff at any point in time. The time inconsistency of the full commitment policy is derived from the fact that in the model only production needs interference, and the production distortion is lagged one period with respect to the tariff wbile the consumption distortion is simultaneous to the tariff. In the intermediary case, i.e., when the government can commit for a limited period of time, the time consistent optimal tariff will be positive but lower than the 'full commitment' tariff. This result indicates that some institutions that have always been considered pure sources of inefficiency, such as protectionist lobbying, may in fact be welfare improving in some cases!
publishDate 1994
dc.date.issued.fl_str_mv 1994-01-17
dc.date.accessioned.fl_str_mv 2014-11-11T13:03:47Z
dc.date.available.fl_str_mv 2014-11-11T13:03:47Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
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url http://hdl.handle.net/10438/12381
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dc.publisher.none.fl_str_mv Escola de Pós-Graduação em Economia da FGV
publisher.none.fl_str_mv Escola de Pós-Graduação em Economia da FGV
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