Optimum Policies with Unemployment and International Capital Mobility
Titel:
Optimum Policies with Unemployment and International Capital Mobility
Auteur:
Michael, Michael S. Hatzipanayotou, Panos
Verschenen in:
International economic journal
Paginering:
Jaargang 4 (1990) nr. 4 pagina's 35-46
Jaar:
1990
Inhoud:
We construct a small open economy model characterized by unemployment, diminishing returns to scale in production, and free international capital mobility. When a sub-optimum labor subsidy exists, the optimal policy is a production or consumption subsidy on the imported good, and it is an import tariff or subsidy according to whether such a policy raises the country's overall employment. When for reasons other than efficiency, a sub-optimal tariff structure exists, the optimal policy towards labor (capital) can be a subsidy or tax when no capital (labor) tax or subsidy exists. When trade is free, the optimal policy towards either factor is always a subsidy. [411,422]
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