Smoothing the adjustment to trade liberalization

Preferential Trade Liberalization:

Trade Liberalization and Employment

This paper reviews both multi-country and country studies on the impact of trade liberalization on growth and employment in developing countries. These studies reveal sharply contrasting effects of trade liberalization on employment, suggesting that country-specifi c and contingent factors are important. In particular, differences in how trade liberalization is implemented are particularly impo...

The Sequencing of Trade Liberalization in the Presence of Adjustment Costs

Perpetual Trade Liberalization

If the costs of going back on previously agreed tari¤ reductions are high relative to the terms of trade gains, then the multilateral liberalization process becomes ‘perpetual’. Perpetual trade liberalization has two unique characteristics. (i) No ‘e¢cient’ tari¤ level exists at which liberalization stops. (ii) Some liberalization must occur in every period. International agreements and institu...

Trade Liberalization and Financial Leverage

This paper argues that trade liberalization has a potentially significant impact on financial leverage. We compare the predictions of the trade-off model of capital structure with the pecking order model. In the first case, we suggest that trade liberalization affects the trade-off between the tax advantages of debt and expected bankruptcy costs. This implies that a reduction in domestic tariff...