Tariffs and Saving in a Model with New Families

38 Pages Posted: 5 Jul 2004 Last revised: 23 Nov 2022

See all articles by Charles M. Engel

Charles M. Engel

University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER); University of Washington - Department of Economics

Kenneth M. Kletzer

University of California at Santa Cruz; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: February 1988

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.

Suggested Citation

Engel, Charles M. and Kletzer, Kenneth M., Tariffs and Saving in a Model with New Families (February 1988). NBER Working Paper No. w2521, Available at SSRN: https://ssrn.com/abstract=425554

Charles M. Engel (Contact Author)

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Kenneth M. Kletzer

University of California at Santa Cruz ( email )

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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