Question

1. In the Trade Talks: When is Tariff Revenue Bad Tax Revenue? excerpts we discussed in class, Dr. Lucie Gadenne discussed the differences between rich and poor countries in regard to tariff use and revenue. Explain how the two types of countries differ in their use and reliance on tariffs. Then explain the recommendation they make for poor countries that would like to open up to free trade.

2. In a scenario where producers face concentrated benefits and consumers face dispersed losses, why might government representatives choose a trade policy that harms overall (total) national welfare? Hint: think of our blue jeans example (select one)

Answer 1

1.Lucie Gadenne joins keynes and Bown to explain when and why some countries use import tariffs as an important source of total tax revenue collections. They discuss her research on the fiscal cost of trade liberalization, what has happened recently when poor countries cut tariffs, and how and why things were different historically when today's rich countries opened up to trade.

Triffs, non- tariffs barriers to trade import liceenses, export licenses. if two more nations repeatedly use trade barriers against each other. Trade policies, goods, such as agricultureal products that developing countries.

2. Economists generally conclude that trade provides net overall positive benefits to economies. Changes in trading patterns associated with changes in trading partners and composition or with new trade agreements, however, may entail certain adjustment costs, including changes in employment, which can be highly concentrated with some workers, firms, and communities affected disproportionately