Equity, Welfare, and the Setting of Trade Policy in General Equilibrium

The authors analyze general equilibrium relationships between trade policy and the household distribution of income, decomposing social welfare into real income level and variance components and emphasizing Gini and Atkinson indexes. They embed these inequality-adjusted social welfare functions in a...

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Bibliographic Details
Main Authors:	Francois, Joseph, Rojas-Romagosa, Hugo
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	AGGREGATE CONSUMPTION ASSETS AVERAGE AVERAGE INCOME AVERAGE INCOMES AVERAGE TARIFFS BENCHMARK CAUSE INEQUALITY COMPETITIVE MARKETS CONSTANT RETURNS CONSTANT RETURNS TO SCALE CONSUMER PRICE INDEX CONSUMER PRICES COUNTRY CHARACTERISTICS COUNTRY SIZE COUNTRY TARIFF DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISTRIBUTION OF INCOME DISTRIBUTIONAL CONCERNS DISTRIBUTIONAL EFFECT DISTRIBUTIONAL EFFECTS DISTRIBUTIONAL IMPACT ECONOMIC GROWTH ECONOMIC INEQUALITY ECONOMIC OUTCOMES ECONOMIC REVIEW ECONOMIC STRUCTURE ECONOMIC STUDIES ECONOMIC THEORY ELASTICITY EMPIRICAL EVIDENCE EMPIRICAL MODELS EQUAL SHARES EQUATIONS EQUILIBRIUM EQUILIBRIUM PRICES EQUILIBRIUM RATE EXPECTED UTILITY EXPLAINING INEQUALITY EXTERNAL TRADE FACTOR ENDOWMENTS FACTOR PRICE FOREIGN TRADE FREE TRADE FUNCTIONAL FORM FUNCTIONAL FORMS GDP GDP PER CAPITA GINI COEFFICIENT GINI INDEX HOUSEHOLD INCOME IMPACT OF INEQUALITY IMPACT OF TRADE IMPORT PROTECTION IMPORT TARIFF IMPORT TARIFFS INCOME INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME EFFECT INCOME INEQUALITY INCOME LEVEL INCOME LEVELS INCOME SCALE INCOME SHARE INCOME SHARES INCOMES INCREASING GROWTH INDUSTRIALIZATION INEQUALITY INEQUALITY AVERSION INEQUALITY INDEX INEQUALITY MEASURE INEQUALITY MEASURES INTERNATIONAL TRADE LABOR INCOME LORENZ CURVE
Online Access:	http://documents.worldbank.org/curated/en/2005/10/6312474/equity-welfare-setting-trade-policy-general-equilibrium http://hdl.handle.net/10986/8649

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Summary:	The authors analyze general equilibrium relationships between trade policy and the household distribution of income, decomposing social welfare into real income level and variance components and emphasizing Gini and Atkinson indexes. They embed these inequality-adjusted social welfare functions in a general equilibrium structure mapping from tariff protection to household inequality. This yields predictions regarding the linkages between trade protection, country characteristics, and inequality within a broad general equilibrium framework. In addition, the authors can separate the efficiency and equity effects of tariffs on welfare. They then examine endogenous tariff formation when policymakers care about both equity and special interests.

Equity, Welfare, and the Setting of Trade Policy in General Equilibrium

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