TY - JOUR
T1 - Aid for trade and welfare
AU - Naito, Takumi
N1 - Funding Information:
I am grateful to two anonymous referees, Noritsugu Nakanishi, and participants at Hitotsubashi Conference on International Trade and Industrial Organization for their helpful comments and suggestions. I also appreciate JSPS KAKENHI #22730190 for financial support. All remaining errors are mine.
PY - 2012/6
Y1 - 2012/6
N2 - A new foreign aid initiative called Aid for Trade is intended to improve a recipient's trade-related infrastructure which lowers its trade costs. We formulate a two-country, continuum-good Ricardian model, where each country's transport cost is inversely related to its effective public services which are subject to congestion. Our numerical experiments show that an increase in the donor's aid/GDP ratio within a certain range raises welfare in both countries if the recipient's relative income tax rate is sufficiently small.
AB - A new foreign aid initiative called Aid for Trade is intended to improve a recipient's trade-related infrastructure which lowers its trade costs. We formulate a two-country, continuum-good Ricardian model, where each country's transport cost is inversely related to its effective public services which are subject to congestion. Our numerical experiments show that an increase in the donor's aid/GDP ratio within a certain range raises welfare in both countries if the recipient's relative income tax rate is sufficiently small.
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U2 - 10.1111/j.1468-5876.2012.00569.x
DO - 10.1111/j.1468-5876.2012.00569.x
M3 - Article
AN - SCOPUS:84861461112
VL - 63
SP - 216
EP - 231
JO - Japanese Economic Review
JF - Japanese Economic Review
SN - 1352-4739
IS - 2
ER -