Working Paper: NBER ID: w23237
Authors: Quytoan Do; Andrei A. Levchenko
Abstract: We compare redistribution through trade restrictions vs. domestic lump-sum transfers. When preferences are non-homothetic, even domestic lump-sum transfers affect relative prices. Thus, contrary to the conventional wisdom, domestic lump-sum transfers are not necessarily superior to distortionary trade policy. We develop this argument in the context of food export bans imposed by many developing countries in the late 2000s.
Keywords: No keywords provided
JEL Codes: F13; O24; Q17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Domestic lump-sum transfers (G59) | Increase in demand for food (Q11) |
| Increase in demand for food (Q11) | Increase in food prices (Q11) |
| Domestic lump-sum transfers (G59) | Increase in food prices (Q11) |
| Binding food export quota (Q17) | Increase in food prices (Q11) |
| Domestic lump-sum transfers (G59) | Distortions in the market (D43) |
| Export ban on food (Q17) | Distortions in the market (D43) |
| Redistribution through domestic policies (H23) | Improve terms of trade for exporting country (F14) |