Trade Policy and Redistribution When Preferences are Non-Homothetic

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Elsevier

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We compare redistribution through trade restrictions vs. domestic lump-sum transfers. When preferences are non-homothetic, even domestic lump-sum transfers affect relative prices. Thus, contrary to the conventional wisdom, domestic lump-sum transfers are not necessarily superior to distortionary trade policy. We develop this argument in the context of food export bans imposed by many developing countries in the late 2000s.

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TRADE RESTRICTIONS, REDISTRIBUTION, FOOD EXPORT BAN

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http://hdl.handle.net/123456789/410830

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https://hdl.handle.net/10986/29204

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