This paper examines the welfare effect of foreign investment under quantitative restrictions for a host country with a cash-in-advance constraint. This constraint results in a divergence between the consumer virtual prices and the world prices. If the cash required for purchasing exportable...

In this paper we examine the impact of tied aid on capital accumulation and welfare in the presence of a quota on imports. Using a simulation model we establish that tied aid can lower the relative domestic price of the manufactured good and therefore reduce the stock of capital. In the presence...

Using a cash-in-advance (CIA) framework, this paper examines the shadow price of foreign exchange under three types of trade restrictions. The CIA constraint creates a consumption distortion that alters the recipient's welfare. If the effective cash requirement for a unit of the exportable...

This paper develops a general equilibrium model to examine the optimal level of environmental preservation in terms of its costs and benefits for a closed as well as an open economy. The optimal preservation policy for a closed economy is to tax the general population and use the tax revenue to...

Various second-best policy mixes of investment measures and environmental taxes for a polluted, small open economy with foreign capital and immovable trade restrictions are examined. The optimal policy mix depends on the types of trade restrictions. When tariffs are in place, strict policies of...

We use a general equilibrium model to examine the welfare effect of domestic equity requirements on multinational firms in the presence of alternative types of trade instruments and varying degrees of the mobility of foreign capital. It turns out that, under quotas, raising equity requirements...

This paper examines pollution and foreign-capital tax policies on the host country?s welfare when foreign-investment tax credits are absent or present in the source country. In the absence of tax credits, the optimal policy is a pollution tax with a foreign-investment tax or subsidy. The...