Economics Dictionary of ArgumentsHome
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| Welfare: In economics, welfare refers to the overall well-being and satisfaction of individuals and society. Welfare economics is a field that uses microeconomic tools to evaluate how resource allocation and economic policies affect this well-being, often seeking to maximize societal utility and efficiency. See also Welfare economics, Welfare gains._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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George A. Alessandria on Welfare - Dictionary of Arguments
Alessandria I 3 Welfare/tariffs/Alessandria/Ding/Khan/Mix: We* (…) find that welfare calculations understate the long-run changes in the economy as is common in models with capital accumulation and trade dynamics (Alessandria and Choi, 2014b(1); Ravikumar et al., 2019(2); Mix, 2023)(3). >Long run/short run. For instance, we find that a unilateral increase in import tariffs of 20 percent will boost US welfare by nearly 1.5 percent when paired with an investment subsidy funded by both existing and new tariff revenue. But the same policy will boost steady state consumption by 3.55 percent and the capital stock by over 20 percent. Clearly, evaluating these policies based on their impact on the steady state will not accurately reflect the aggregate effects of these reforms. Importantly, we find large differences in the effects of the reforms on the economy that offset other taxes. For a range of policies under consideration, global and unilateral, welfare is always higher with a fiscal adjustment, and can be as much as 2.5 percentage points higher. Alessandreia I 20 Welfare gains: (…) welfare gains understate the long-run changes in consumption induced by these fiscal adjustments. While welfare is about 2 to 2.5 percentage points higher with an investment subsidy compared to the lump sum rebate, steady state consumption is 3.6 to 5.5 percentage points higher.* * George A. Alessandria, Jiaxiaomei Ding, Shafaat Y. Khan, and Carter B. Mix. (2025) The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 JEL No. E6, F10, F4 1. Alessandria, George and Horag Choi, and Kim J. Ruhl, “Trade Adjustment Dynamics and the Welfare Gains from Trade,” Journal of International Economics, 2021, 131, Article 103458. 2. Ravikumar, B., Ana Maria Santacreu, and Michael Sposi, “Capital accumulation and dynamic gains from trade,” Journal of International Economics, 2019, 119, 93–110. 3. Mix, Carter, “The dynamic effects of multilateral trade policy with export churning,” International Economic Review, 2023, 64 (2), 653–689._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Alessandria I George A. Alessandria Jiaxiaomei Ding Shafaat Y. Khan, The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 Cambridge, MA 2025 |
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