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Wedges: Distribution, Distortions, and Market Integration

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  • Bertola, Giuseppe

Abstract

This paper proposes a stylized model of policy determination and imperfect international integration. A policy wedge aims to correct laissez-faire market imperfections and/or redistribute welfare across heterogeneous agents. Policy is subject to both race-to-the-bottom and beggar-thy-neighbor forces if the country's politico-economic equilibrium interacts with the rest of the world. Variation of international market wedges induces patterns of country-specific regulation and deregulation that depend on political and structural features in non-obvious, intuitive, and empirically realistic ways.

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  • Bertola, Giuseppe, 2017. "Wedges: Distribution, Distortions, and Market Integration," CEPR Discussion Papers 11980, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11980
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    1. Bertola, Giuseppe, 2017. "European unemployment revisited: Shocks, institutions, integration," Research in Economics, Elsevier, vol. 71(3), pages 588-612.

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    More about this item

    Keywords

    Policy competition; Capital mobility;

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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