Aid for trade and welfare

    Research output: Contribution to journalArticle

    1 Citation (Scopus)

    Abstract

    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.

    Original languageEnglish
    Pages (from-to)216-231
    Number of pages16
    JournalJapanese Economic Review
    Volume63
    Issue number2
    DOIs
    Publication statusPublished - 2012 Jun

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    Trade costs
    Relative income
    Tax rate
    Congestion
    Transport costs
    Income tax
    Foreign aid
    Numerical experiment
    Public services
    Ricardian model

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Aid for trade and welfare. / Naito, Takumi.

    In: Japanese Economic Review, Vol. 63, No. 2, 06.2012, p. 216-231.

    Research output: Contribution to journalArticle

    Naito, Takumi. / Aid for trade and welfare. In: Japanese Economic Review. 2012 ; Vol. 63, No. 2. pp. 216-231.
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