Is free trade optimal for a small open economy with tourism?

Chi-Chur Chao; Bharat R. Hazari; Jean-Pierre Laffargue; S. H. Yu Eden

doi:10.1007/978-3-540-78676-4_7

Is free trade optimal for a small open economy with tourism?

Chi-Chur Chao
, Bharat R. Hazari
, Jean-Pierre Laffargue
, S. H. Yu Eden

Department of Economics and Finance

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 12 - Chapter in an edited book (Author) › peer-review

5 Citations (Scopus)

Abstract

We explore the welfare effects of tariffs and investment taxes for a small open economy in the presence of tourism. Inbound tourism converts local non-traded goods into tradeable, generating a tourism terms-of-trade effect. Because of this favourable expenditure-shifting effect when goods are substitutes, increases in import tariffs and investment taxes can actually improve welfare of domestic residents. We establish that for a small open economy with tourism, free trade is not the first-best policy. The optimal rates of tariffs and investment taxes are then derived and simulated for the economy with tourism. © 2009 Springer Berlin Heidelberg.

Original language	English
Title of host publication	International Trade and Economic Dynamics: Essays in Memory of Koji Shimomura
Publisher	Springer Berlin Heidelberg
Pages	49-62
ISBN (Print)	9783540786757
DOIs	https://doi.org/10.1007/978-3-540-78676-4_7
Publication status	Published - 2009

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Publication details (e.g. title, author(s), publication statuses and dates) are captured on an “AS IS” and “AS AVAILABLE” basis at the time of record harvesting from the data source. Suggestions for further amendments or supplementary information can be sent to [email protected].

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This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 12 Responsible Consumption and Production

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title = "Is free trade optimal for a small open economy with tourism?",

abstract = "We explore the welfare effects of tariffs and investment taxes for a small open economy in the presence of tourism. Inbound tourism converts local non-traded goods into tradeable, generating a tourism terms-of-trade effect. Because of this favourable expenditure-shifting effect when goods are substitutes, increases in import tariffs and investment taxes can actually improve welfare of domestic residents. We establish that for a small open economy with tourism, free trade is not the first-best policy. The optimal rates of tariffs and investment taxes are then derived and simulated for the economy with tourism. {\textcopyright} 2009 Springer Berlin Heidelberg.",

author = "Chi-Chur Chao and Hazari, \{Bharat R.\} and Jean-Pierre Laffargue and Eden, \{S. H. Yu\}",

note = "Publication details (e.g. title, author(s), publication statuses and dates) are captured on an “AS IS” and “AS AVAILABLE” basis at the time of record harvesting from the data source. Suggestions for further amendments or supplementary information can be sent to [email protected].",

year = "2009",

doi = "10.1007/978-3-540-78676-4\_7",

language = "English",

isbn = "9783540786757",

pages = "49--62",

booktitle = "International Trade and Economic Dynamics: Essays in Memory of Koji Shimomura",

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}

Is free trade optimal for a small open economy with tourism? / Chao, Chi-Chur; Hazari, Bharat R.; Laffargue, Jean-Pierre et al.
International Trade and Economic Dynamics: Essays in Memory of Koji Shimomura. Springer Berlin Heidelberg, 2009. p. 49-62.

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 12 - Chapter in an edited book (Author) › peer-review