In a series of recent papers, Neary and others have established the importance of trade in factor services, especially capital, in determining the welfare effects of import restrictions by tariffs, QRs, and VERs. In the absence of induced terms-of-trade changes and rental rate effects, Neary...

Madagascar's weak administrative system and complex tax structure (with many exemptions) have led to tax evasion and smuggling. The authors compare Madagascar's fiscal system with that of other low-income countries, noting its greater reliance on distortionary taxes. Using a 10-sector model and...

This paper sets out to test the robustness of Balassa's recommendation of neutral incentives to domestic and export sales in a setting where some sectors have domestic market power. This paper shows analytically that the welfare effects of trade policy are more complex than they are in a setting...

Drawing on evidence about industrial organization and market structure, the authors develop a computable general equilibrium model in selected industrial sectors with increasing returns to scale. They use this model to estimate the welfare gains Korea would realize from abolishing the import...

This paper evaluates general equilibrium welfare effects of tariffs, quotas, and voluntary export restraints under different assumptions about international capital mobility. We show analytically that, when induced terms-of-trade and rental-rate effects are considered, the qualitative influence...

The “distance effect” measuring the elasticity of trade flows to distance has been to be rising since the early 1970s in a host of studies based on the gravity model, leading observers to call it the “distance puzzle”. We review the evidence and explanations. Using an extensive data set...

This paper uses a price-leadership model of the international vanilla market to study the welfare consequences of alternative pricing policies for Madagascar – a country that controls domestic production through a single-channel marketing system and is the leader in the vanilla market....

The paper considers the effects of trade expansion between the EU and the Central and East European Countries (CEECs) on France. Taking a political-economy perspective, we attempt to detect potential demand for protection at the sectoral and regional level. Recent aggregate figures for trade and...

This paper simulates the costs of the US-Japan auto VER. Under a standard constant returns to scale (CRTS) formulation, the costs are estimated at about $10 billion. It then sequentially introduces important features of the auto VER: endogenous rent premium determination, wage distortions in...

With preferential trading Agreements (PTAs) on the rise worldwide with multiple memberships, rules of origin-- which are necessary to prevent trade deflection --are attracting increasing attention. At the same time, preference erosion for GSP recipients is threatening the viability of the...