DISCRIMINATORY FEATURES OF DOMESTIC FACTOR TAX SYSTEMS IN A GOODS MOBILE-FACTORS IMMOBILE TRADE MODEL: AN EMPIRICAL GENERAL EQUILIBRIUM APPROACH

In: Journal of political economy, Band 88, Heft 6, S. 1177-1203

Abstract

A RECENTLY CONSTRUCTED MODEL OF DOMESTIC AND FOREIGN TRADE ACTIVITY FOR THE U.S., THE EEC, AND JAPAN IS USED TO ANALYZE THE EFFECTS OF REMOVING DISTORTIONS IN DOMESTIC FACTOR TAXES, TAKING INTO ACCOUNT INTERNATIONAL TRADE FLOWS. RESULTS SUGGEST THAT UNDER SOME ASSUMPTIONS CURRENT FACTOR TAX STRUCTURES CAN PRODUCE SIGNIFICANT TERMS-OF-TRADE GAINS, AND IN THE U.S. CASE SHOW WELFARE LOSSES.