Domestic Distortions and International Trade.

Journal article

In this paper, the authors develop techniques for measuring the trade policy equivalent of domestic distortions using a distance function approach. Their measure, the trade restrictiveness index, is shown to equal the uniform tariff that is welfare equivalent to a given pattern of domestic taxes and subsidies. The authors extend the index to incorporate taxes in markets for nontraded goods and factors of production and illustrate its operationality with an application to liberalization in Mexican agriculture. They conclude that their index has considerable potential in empirical work and as an aid to trade negotiators.

Authors: Anderson, J; Bannister, G; Neary, J

• Journal: International Economic Review
• Volume: 36
• Publication date: 1995-01-01
• ISSN: 0020-6598
• Language: English