TEL  Vol.1 No.2 , August 2011
Tourism, Terms of Trade and Welfare to the Poor
ABSTRACT
The paper investigates the impact of an increase in tourism and a change in the terms of trade on the welfare of different classes in an economy. We set up a three-sector, three-factor (one specific) model of general equilibrium to derive the results. The most important result we obtain is that tourism can immiserize the poor. In the concluding section we argue that a tax on tourism (a non-distortionary tax) should be used to subsidize the poor and restore their welfare level.

Cite this paper
nullB. Hazari and J. Lin, "Tourism, Terms of Trade and Welfare to the Poor," Theoretical Economics Letters, Vol. 1 No. 2, 2011, pp. 28-32. doi: 10.4236/tel.2011.12007.
References
[1]   M. M. Opp, H. F. Sonnenschein and C. G. Tombazos, “Rybczynski’s Theorem in the Heckscher-Ohlin World-Anything Goes,” Journal of International Economics, Vol. 79, No. 1, 2009, pp. 137-142. doi:10.1016/j.jinteco.2009.05.005

[2]   J. N. Bhagwati, “Immiserizing Growth: a Geometrical Note,” The Review of Economic Studies, Vol. 25, No. 3, 1958, pp. 201-205. doi:10.2307/2295990

[3]   A. Krueger and H. F. Sonnenschein, “The Terms of Trade, the Gains from Trade and Price Divergence,” International Economic Review, Vol. 8, No. 1, 1967, pp. 121-127.

[4]   B. R. Hazari and P. M. Sgro, “Tourism, Trade and National Welfare,” Amesterdam, Elsevier, 2004.

[5]   J. N. Bhagwati and H. G. Johnson, “Notes on Some Controversies in Theory of International Trade,” The Economic Journal, Vol. 70, No. 277, 1960, pp. 74-93. doi:10.2307/2227483

[6]   M. C. Kemp, “The Pure Theory of International Trade and Investment,” Prentice-Hall, Engle-wood Cliffs, 1969.

[7]   C. C. Chao, B. R. Hazari, J. P. Laf-fargue and S. H. Yu, “Is Free Trade Optimal for a Small Open Economy with Tourism?” International Trade and Economic Dynamics, Springer, 2008.

 
 
Top