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The Welfare Analyses of Aid Tied with Tariff Wedge Adjustment

Author

Listed:
  • Ke-shaw Lian

    (Department of International Trade, National Cheng-Chi University, Taiwan and ¡@ Industrial Economics and Knowledge Center, Industrial Technology Research Institute, Taiwan)

Abstract

A general equilibrium model is established to analyze the effect of foreign aid tied with tariff wedge adjustments on economic welfare. The welfare effect of foreign aid depends on whether the government rebates tax revenue to households. I show that foreign aid tied with tariff wedge adjustment may immiserize the recipient country only if the government doesn¡¦t rebate tax revenues to households or if the increase of the tariff wedge of the imported goods over exported goods is too large.

Suggested Citation

  • Ke-shaw Lian, 2008. "The Welfare Analyses of Aid Tied with Tariff Wedge Adjustment," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 4(1), pages 25-34, January.
    • Handle: RePEc:jec:journl:v:4:y:2008:i:1:p:25-34
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    More about this item

    Keywords

    foreign aid; tariff wedge; transfer paradox;
    All these keywords.

    JEL classification:

    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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