Stochastic trade policy with asset markets. The role of tariff structure
This paper uses a Stockman-Dellas type two-country, two-good, stochastic general equilibrium model to consider the effects of commercial policy when asset markets are complete. We show that: (i) import and export tariffs do not have symmetric effects because interstate relative prices depend on the entire tariff structure; (ii) when commercial policy is random and exogenously determined, the ex post comparison of utility across states depends upon whether import or export tariffs are used; and (iii) when endowments are random, implying the optimal tariff varies across states, the introduction of asset markets may be welfare-reducing when only import tariffs are used. © 1993.
Barari, Mahua, and Harvey E. Lapan. "Stochastic trade policy with asset markets: The role of tariff structure." Journal of International Economics 35, no. 3-4 (1993): 317-333.
Journal of International Economics