Because trade liberalization which is anticipated to be temporary creates a divergence between the effective domestic rate of interest and the world rate of interest, tariff-reduction in the presence of international financial asset trade may reduce welfare for a small country. Calvo has argued...

We investigate the effects of higher tariffs on the current account.Tariffs may increase or decrease investment depending on the capital intensity of the sector protected. We find that ther esponse of saving to tariffs issensitive to the modelling of saving behavior. In a model in which...

We examine a model of a small open economy in which there is free international mobility of financial capital, investment in capital goods and a non-traded good. Such an environment is rich enough to explain several phenomena that are inexplicable in more barren models. We suggest an explanation...

We investigate the effects on saving and growth of the rent sharing between firm owners and workers documented in recent empirical work. In an overlapping-generations framework, more rent sharing is found to increase growth. This result also holds in a model with a single generation of...

The motives of a small country for borrowing to purchase capital equipment on international markets are studied. The country produces tradable capital and a nontradable consumption good and borrows or lends capital to achieve higher levels of welfare. A shift in time-preference favoring future...

The paper explores how a tariff may affect saving through intergenerational redistribution of income that is caused by changes in factor prices and by the distribution of tariff revenue. The model is a Blanchard-type overlapping generations model. Two types of revenue distribution schemes are...