Title: The welfare effects of a partial tariff reduction under domestic distortion in Japan
Abstract:We examine a partial tariff reduction policy in a specic factor model with two import-competing sectors. When one of them enjoys a higher tariff and is also subject to a production subsidy, will a tar...We examine a partial tariff reduction policy in a specic factor model with two import-competing sectors. When one of them enjoys a higher tariff and is also subject to a production subsidy, will a tariff reduction in the other import-competing sector be welfare improving? We argue that this second-best type question is highly relevant to Japan, and calibrate our model to its 2013 economy. We nd that the policy is undesirable and that even a complete subsidy removal is insufficient to make it desirable. Making it welfare improving requires the other sector's tariff be more than halved.Read More
Publication Year: 2017
Publication Date: 2017-05-01
Language: en
Type: preprint
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