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A Dynamic Optimal Trade Facilitation Policy

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  • Nasreen Nawaz

Abstract

The existing literature does not consider the efficiency losses on the adjustment path after a trade facilitation policy is adopted. After a trade facilitation measure, the cost of the foreign producer gets a downward jump, which affects imports, and the market gets out of equilibrium. The market supply and demand get adjusted over time until the post-policy equilibrium arrives. The adjustment of price is based on the lack of coordination among agents at the existing prices. An optimal trade facilitation policy subject to a cost constraint has been derived, which minimizes the efficiency losses on the adjustment path.

Suggested Citation

  • Nasreen Nawaz, 2022. "A Dynamic Optimal Trade Facilitation Policy," The International Trade Journal, Taylor & Francis Journals, vol. 36(2), pages 102-122, March.
    • Handle: RePEc:taf:uitjxx:v:36:y:2022:i:2:p:102-122
    DOI: 10.1080/08853908.2020.1859021
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    References listed on IDEAS

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    6. John S. Wilson & Catherine L. Mann & Tsunehiro Otsuki, 2003. "Trade Facilitation and Economic Development: A New Approach to Quantifying the Impact," The World Bank Economic Review, World Bank, vol. 17(3), pages 367-389, December.
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    9. repec:hal:spmain:info:hdl:2441/6apm7lruv088iagm4rv2c33jtg is not listed on IDEAS
    10. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," SciencePo Working papers hal-03579844, HAL.
    11. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," Post-Print hal-03579844, HAL.
    12. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
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    Cited by:

    1. Ahmed, Muhammad Ashfaq & Nawaz, Nasreen, 2023. "Policy Formulation for an Optimal Level of Savings in a Dynamic Setting," MPRA Paper 121352, University Library of Munich, Germany, revised 29 Oct 2023.
    2. Ahmed, Muhammad Ashfaq & Nawaz, Nasreen, 2023. "Adam Smith's Perfectly Competitive Market is Not Pareto Efficient: A Dynamic Perspective," MPRA Paper 118362, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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