Working Paper


J. Peter Neary



tariffs commercial policy welfare economics investments taxation taxes open economy tariff optimal tariffs

Welfare effects of tariffs and investment taxes (1988)

Abstract This paper derives first- and second-best levels of optimal tariffs and taxes on internationally mobile capital in a general model of an open economy. When world prices are fixed (so that non-intervention is optimal), iso-welfare contours in tax-tariff space are shown to be ellipses centred around the origin which are tilted upwards if and only if importables are relatively capital-intensive. Under plausible assumptions, the same is true in the large open economy case, except that the contours are now ellipses centred around the non-zero first-best intervention point.
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J. Peter Neary

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J. Peter Neary
University College Dublin
Total Publications: 79