Optimal foreign aid and tariffs
Description
This paper investigates the optimal choice of foreign aid when trade policies are decided in a non-cooperative fashion. Three alternative scenarios, depending on the timing of the actions and on whether aid is tied, are analyzed. It is shown that, in the case where aid is decided before tariffs, untied aid can lead to the reduction of the recipient's optimal trade tax. When the donor can tie the aid to a reduction in the recipient's tariff, the optimal aid level is always positive and the world can always achieve a Pareto-efficient equilibrium.
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| ID Code: | 180587 | ||
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| Item Type: | Contribution to Journal (Journal Article) | ||
| Refereed: | Yes | ||
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| Measurements or Duration: | 21 pages | ||
| Keywords: | Nash tariffs; Foreign aid; Tied aid | ||
| DOI: | 10.1016/S0304-3878(01)00178-X | ||
| ISSN: | 0304-3878 | ||
| Pure ID: | 42952810 | ||
| Divisions: | Past > QUT Faculties & Divisions > QUT Business School Current > Schools > School of Economics & Finance |
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| Funding Information: | This project was initiated during the visit of Lahiri, Wong and Woodland at Economic Policy Research Unit (EPRU), Copenhagen, whose activities are financed by the Danish National Research Foundation. We are grateful for the helpful comments on an earlier draft by two anonymous referees, Eric Bond, Murray Kemp, Nicholas Schmitt and to participants in seminars at the Midwest meetings in Michigan State University, the Nordic International Trade Seminars in Stockholm and the EEA meetings in Toulouse. Appendix A | ||
| Copyright Owner: | Consult author(s) regarding copyright matters | ||
| Copyright Statement: | This work is covered by copyright. Unless the document is being made available under a Creative Commons Licence, you must assume that re-use is limited to personal use and that permission from the copyright owner must be obtained for all other uses. If the document is available under a Creative Commons License (or other specified license) then refer to the Licence for details of permitted re-use. It is a condition of access that users recognise and abide by the legal requirements associated with these rights. If you believe that this work infringes copyright please provide details by email to qut.copyright@qut.edu.au | ||
| Deposited On: | 20 Feb 2020 09:17 | ||
| Last Modified: | 03 Mar 2024 07:05 |
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