Working Paper: NBER ID: w2521
Authors: Charles Engel; Kenneth Kletzer
Abstract: The paper explores how a tariff may affect saving through intergenerational redistribution of income that is caused by changes in factor prices and by the distribution of tariff revenue. The model is a Blanchard-type overlapping generations model. Two types of revenue distribution schemes are examined ? lump-sum distribution of current revenues to currently living individuals, and distribution as a subsidy to holders of physical wealth. (There is no fiscal policy in this paper -- the government budget is continuously balanced). We draw some general conclusions about the non-neutralities that arise in this type of model as opposed to single-generation models, or models in which perfect bequest motives exist.
Keywords: Tariffs; Saving; Overlapping Generations; Income Redistribution
JEL Codes: F13; D91
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tariffs (F13) | saving (E21) |
| tariffs (F13) | current account (F32) |
| current account (F32) | saving (E21) |
| redistribution of tariff revenue (H23) | aggregate saving (C43) |
| tariffs (F13) | income distribution (D31) |
| income distribution (D31) | saving (E21) |
| tariffs (F13) | total expenditure (P44) |
| total expenditure (P44) | saving (E21) |