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Urban unemployment and optimal trade policy in a cash-in-advance economy (2000)

Chao, Chi-Chur ; Yip, Chong K.

Springer

Journal of economics 71 (2000), S. 59-77

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ISSN: 1617-7134

Keywords: unemployment ; cash in advance ; commercial policy ; F11 ; O10

Source: Springer Online Journal Archives 1860-2000

Topics: Economics

Notes: Abstract This paper examines the welfare effects of commercial and tax/subsidy policies on a developing economy with sectoral unemployment and differential cash-in-advance constraints. The optimal tariff can be negative when the cash-in-advance requirement for buying the importable good is larger than that for the exportable good. In addition, when capital is sectorally mobile, production taxes are superior to production subsidies to the importable sector. Nevertheless, to reach the first-best optimum, a uniform wage subsidy to both sectors is required.

Type of Medium: Electronic Resource

URL: http://dx.doi.org/10.1007/BF01227497

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