Poliey, Planning, andR WORKINlN' Trade Polcy Country Economics Department The World Bank September 1988 WPS 83


# WVelfare Costs of U.S.Quotas on Textiles, Steel,and Autos

Jaime de Melo and DavidTarr

Protectionism is popularbut costly: the United States loses $21 billion a year in welfare costs through quotas on textiles, steel, and autos.

TihePolicy. Planning, andResearchCnplex distributes PPRWoAking Ppers to dissarnate the findings of workin progms and to 0acoungethe exchnge of ides among Bank staff and all others interustedin developmern issues.These papers carry the names of the authors. rcefectondytheir views, and shouldbeuised and cited accordingly.The findings, interpretations, and conclusions arethe authors' own. They shouldnot beattributed tothe World Bank,its Board of D;xctors, itsmanagement. or any of its memnber catries.Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPolaa Pning, and Reserc

Trad*Policy

Nontariff baniers prevent a transition to the Removing the remaining tariffs (an average realities of international competition, and their 3.5% in 1984) would produce a welfare gain of welfare costs are huge. about $0.9 billion

- for a net benefit of $105 billion, measured in tenns of the discounted 'Te United States loses an estimated $14 value of displarced workers' lost earnings over a billion a year in revenues through rents lost to lifetime. exporting countries through export quotas. Add another $7 billion for distortionary costs. This paper is a product of the Trade Policy Division, Country Economics Department. Copies are available free from the World Bank, 1818 H Street NW, Washington DC 20433. Pleace contact Carla Cabana, room N8-069, extension 61539.

The PPR Working Paper Series disseminnates the fio ings of work under way in the Bane s Pophcy, PlaWing, and Research Complex. An objective of the series is to get these fndings out quickly, even if presentations are less than fully polished. The findings, interpretations, and conclusions in these papers do not necessarily represent official policy of the Bank. Copyright 0 1988 by the International Bank for Reconstruction and DevelopmnentSTe World Bank

### Welfare Costs of U.S. Quotasin Textiles, Steel,andAutos

by Jaime deMelo and David Tarr TABLE OF CONTENTS


### 1. Intoduction
.......... 1 

## 2. Model Outline .......................................................................... 3 3
. Elasticity and Prernia Esdmates
............................. 7 4. Welfare CostEstmates
............................... 10 5'. Eployment
............................... 15 6. Conclusions
............................... 17 Footnotes ............................... 19 References
............................... 22 Appendix A: Model Equations
............ .. ................. 26 Appendix B: DataSources andData Preparation
............................. 34 Tables Tablei
............................ 6 Table 2
........................... 9 Table3
........................... 1 1 Table4
............................ 13 Table 5
............................ 16 Table Al
............................ 27 TableA2
............................ 31

The paperdrawson a largerstudyby Tarr (1988)whilehe was at the US FederalTrade Commission.We thankparticipants of the General Equilibrium TradePolicyModelling Workshop at theUniversity of Western Ontario forcomments.Theviewsarethose of the authors,not thoseof theUSFTC,nor thoseof the WorldBank. We thankJulie Stanton for extremely valuableresearchassistance, MariaAmealfor logisticsupport,and Soren Nielsen for computer support.

### 1

I. Introduction The United States, along with other developedcountries,is progressively abandoningits commitment to the postwarmultilateral trading system. The shift towardsbilateralism is evident in the proliferation of discriminatory trade measures, which have increasingly canceledthe benefits to the world econfny since World War II ef the successive rounds of multilateraltariff reductions on a most-favored-nation (MFN)basis. DisCriminatory trademeasures are not only administered bilaterally; they are often undertakenunilaterally(e.g. various forms of administeredprotection) or through multilateral arrangements (e.g. the Multi-Fibre Agreement). Moreover, the MFN clause does not prevent countries not participating in the multilateral negotiations from facing higher average tariffs on their exports: in spite of the Generalized System of Preferences (GSP),developing countriesexports to developedcountries face tariffs that are on average twice as high as those faced by developedcountries (Balassa and Balassa, 1984). Though accentuated by the recent macroeconomic imbalances and resultingexchange rate imbalances among developed countries,the move towards discriminatory trade policy practices has been on the rise for the past twenty years. The rising protectionism in developedcountries in the form of non-tariffbarriers (NTBs) retards the relocation of production of mature industriesfrom developedto developing countries.1/ NTB protectiouiGm is congenialto thosewho seek protection because it is quick and lacks transparency and to exporters who negotiate it because they gain the rents. Thus, NTBs engender widespreadoppositionto trade liberalization. NTBs also impose huge costs on consumersand prevent a smooth transition to the realitiesof international competition.2 

### Quitea few studies havebeen carried out to drive home the costs of thesespecial protection arrangements. Individual sector studies for textiles: (Horkre (1985); Tarr and Horkre (1984); Cline (1987); Keesing andWolf (1980)]; for automobiles[Winston andAssociates (1987); Tarrand Morkre (1984); FeenstLa (1984, 1985a, 1985b); Dinopoulosand Kreinin

(1986)]; for steel [Tarr and Morkre (1984)] are amongthemostvilely known studies thavprovide estimatesof the welfare costs of NTBs in the US. Perhaps themost comprehensive recent estimatescome from the 31 case studies of special protection by Hufbauer, Berliner and Schott(1986). All thesestudies, usinga partial equilibrium(PE)framework.rovide a very useful range of estimatesof the costs of non-tariff px lon. These studies are especially valuable when taken individually because the assumptions of PE analysis provide an adequate approximation of reality even thougk. the behavior giving rise to the demand and supply curves used in the estimation are not always properly spelled out. But, as we discuss below, when it comes to aggregating the costs of all restrictions taken together, the underlying assumptions aremuch lesstenable. Thispaperdeals with the problems of PE analysis by presenting estimates froma static ten-sector computable general equilibrium (CGE) modelof the US economy calibrated to the year 1984 when QRs in textiles, and autos were in effect, and those on steel were in negotiation. To our knowledge, the treatment of QR-associated effects here is more satisfactory than in previous CGE applications. 'Whilethe US-negotiated VER on automobiles has expired, demand for NTB protectionism in the US remains strong andmay be on the risebecause of presidential campaign politics.A new round of estJmates of the costs of protection is therefore all themore welcome.3

The general equilibrium (GE) approachused here accounts for three effects omittedby PE estimates. First, the inclusionof a balance of trade constraint (expressed In foreign currency units) removes an upward bias present in PE analysis. Second, the effects of income transfersto and from the rest-of-the-world (ROW) are properly accounted for so that, unlike PE analysis, capturing quota rents affects resourceallocation. Third, ecnuomy-wide resourceconstraints and interindustry linkagesprovide a more accurate estimation of sectoral employmenteffects. The remainderof the paper is organized as follows. Section 2 outlinesthe model. Section 3 details the sources of estimatesof premia
on preexisting QRs in 1984 and the sources for the parametersdescribing demand and supplyelasticities. Welfare and employment estimatesof QR removal are presented by industry and in the aggregate in section 4. Conclusionsfollow in section 5.

2. Model Outline 2/ The simulation model is a static CGE model with assumptions that correspondclosely to those followed by the partial equilibrium estimates cited above, namely a neoclassical perfect competition Walrasian model in which a representative consumermaximizes utility subject to a budget constraint, atomistic producers minimize costs, and the governmentredistributes, in a lump-sum manner, tax revenues from trade policy. The economy has a fixed endowmentof labor and capital,and faces an exogenous balance of trade constraint expressed in foreign currency units. Becausewe are interestedin the static welfare costs of protection, we abstract from investment, thereby simplifying the welfare analysis. The components of demand thereforeonly include consumerdemand and intermediate demand.

### 4

Under these assumptions. it is clear that the welfare changesdue to a change in trade policy are the usual production and consumption costs of protection referred to in the literature on the costs of protection. Our measure of the welfare cost to the US of departuresfrom free trade is given by the equivalent variation (EV)measure associated with the utility functionselected for the representative consumer, i.e.,


### 1 1 o EV - C[IU(p ,y ), p I

- ClIU(p , y ). p

where C is the cost function corresponding to the selectedutility function,superscripts o and 1 refer to the equilibrium before and after the counterfactual trade policy experiment, p is the vector of final goods prices, and IU is indirect utilitywhich depends on prices and income. 3/ The structureof the ten-sector model is described in table 1. 4/ To best capture the trading possibilities at a relatively aggregatedlevel for an economy like the US, we have treated commoditiessupplied (or purchased)abroad and domesticcommodities sold on the domestic market as imperfectsubstitutes. This assumption of product differentiation, which has found considerable support at the disaggregate level (e.g. Isard, 1977), is commonlyused in appliedgeneral equilibrium analysisand is also adopted in most of the partial equilibrium estimates of the cost of protectionin the US cited above. The assumptionis particulirly suitable for the relatively high level of aggregation in our btudy and allows for the observedcross-hauling in trade statistics. On the export side, the assumption of product differentiation is reflected in the constant elasticity of transformation (CET) funct.Lon between domesticand foreign5

sales. 5/ A symmetric functional form is specifiedfor intermediat_ demand by sector (see below). Table 1 shows that production possibilities are parametrized by assumingCES furctionsfor vn4 -added and Leontief functions between intermediates (as a whole) and valae-addad, as well as witnwn intermediates. However, within each sector, intermediate demand is a CES function between the domestically produced intermediate and the compu.ting foreign intermediate. To give an example, no substitution is allowedbetween purchasesof steel and othermanufacturing intermediates, but substitution in purchases is allowedbetween domestically produced and foreign produced steelwhen their relativeprices change as a result of a change in trade policy. Likewise, in consumption demand, we allow for non-unitaryincome elasticities of demand and non-zero cross-price elasticities of demand between domestically produced and foreignproducedconsumergoods. Finally is the issv_. of whether or not the US would face fixed terms-of-trade for the trade policy changes envisaged here. In previous single-country partial equilibrium estimates, authors have invariably assumed that the US is a small supplierand demander in world markets. 6/ In our estimates, we retain this assumption except for autoswhere, in some cases, we argue that differences in standardsand the size of the US market results in a non-infinite foreign elasticity of supply. When we considera simultaneous removal of all discriminatory protection, at times,we also assume that the US would face a non-infinite elasticityof demand for her agricultural exports. 7/ The description of the model is complete except for our treatment of QRs. In the US, for the sectors considered here, there are no government controls or direct quota allocations with resaleprohibition. Hence,IBM/JDM-021 6 

## Table Model Structure 1. Substitution in Production and Demand Domestic Supply l.a Production and Its Allccation Gross Output CET 

# !I Export Supply Leontief
Value Added Intermediate 

# I I CES Leontief 

# / \ Composite Composite Capital I.Ir Intermediate Intermediate 

# I I .ES 

### ~~~~~~CES Domestic Imoted Domestic Imported Intermediate Intermediate Intermediate Intermediate l.b Consumer Demand Consumption 

# I LES Domestic Imported 2. Imoort SuOD1Yand Foreign Export Demand Import Supply: Infinitely elastic (exceptautos) Foreign Export Demand: Infinitely elastic (exceptagriculture)

a7
unlike the case of many QR allocation schemes in developing countries, the US system of QRs allows for market-clearing prices. 8/ Since in 1984 quotas were already in place in autos and textiles, we assume that observed purchases were at the premia inclusive pricGs in that year. (The estimation of premia is discussed in section 3). Finally, it is worth noting that, following the calibration procedures in appliedgeneral equilibrium models,we are assumingthat the prices and quantities observed in 1984 correspondto an equilibrium of the US economy with normal capacity utilization and in which the only distortions are the QRs and tariff on imports. This may be viewed as a strong assumption but it is implicitas well in all other estimatesof the costs of protection. Host previous GE studies of the costs of protection (e.g. Deardorffand Stern (1986) and Whalley (1985)) that have dealtwith QRs have done so in the context of globalmodels where QRs have been treatedby their tariff equivalents without including the associated rent transfer that occurswith the US QRs. Moreover, the choice of functionalforms has resulted in excessivelylarge terms-of-trade effects for unilateral changes in trade policy (see footnote 6). 9/ Both problemsare remedied in our approach.

3. Elasticity and Premia Estimates The accuracyof our estimates of the welfare costs of protection depend on the assumptions embodied in the model, on the estimatesof preexistingpremia due to QRs in existence and on the supply and demand elasticity estimates. With respect to the modellingassumptions, with the possible exceptionof noncompetitive behavior in autos (see Winston and Associates (1987) and Dixit (1987)), our assumptions are certainly

### 8
plausibleand representative.Hence considerable effortwas de'-c:ed to a *parameter search' for elasticities of demand and supply and to constructing premia estimatesfor existing QRs in textilesand autos. We discuss these brieflybelow. (Tarr (1988, chaps. 6 and 7) is devoted to a detaileddiscussion of how these estimates were derived.) Table 2 presents all the necessaryelasticities and our constructed estimatesof pre-existing premia. The elasticities reportedin ta>'' 2 corres mndto the 'central' elasticities. When we report the likely %nge of welfs e costs from removingall trade restrictions in table 4 below,we are reportingresults from the 'low' and "high' elasticities that are derived from the 'central' elasticities in table 2 by subtracting (adding)
a standard deviation.10/ Because much econometric work has been done to estimate the capital/labor substitution elasticities, we are fairly confidentabcut the relativeaccuracy of these elasticities. We are also fairly confident in the estimatesof importdemand elasticities for which a number of estimatesare available. Less confidence can be placed on export supply elasticities. However,because these latter elasticities only enter indirectlyinto our estimations, we have found that our welfare estimates are quite insensitive to considerable changes in theirvalues. 11/ Turning to the estimation of the premia rates estimates (expressed
as a percent of landed US imrort price inclusive of tariffs), we have relied on Hamilton (1988) for apparel. In order to understandthe problem of the premia rate estimation, it is crucial to recognizethat the existing MPA arrangements allow a number of marginallyinefficient foreign suppliers to sell in the U.S. If the MFA were abolished, many of them would be squeezedout of the US market by competition. The quota premium rate earned by these inefficient suppliers,is less than the quota premium rateTabl- 2 Elasticity Specification (Central Case)Elasticity of Elasticity of Elasticity of Transformtion Price Elestieities Substitution Substitution Dometic/Export of Final Demand Premis ColuIn Notes Intermdiates (.) Capital/Labor Sales Dometic Imports Rates Sector (1) (2) (3) (4) (5) (1) (2) (3) (4) (S) (6)
Agriculture a c * k f 1.4 0.6 4.0 0.76 0.3 Feed a c ' f f 0.8 0.3 3.0 0.90 1.1 Mining b b * j f 0.5 0.3 S.0 0.50 1.0 Iron and Steel a d * I f 8.0 1.0 8.0 1.0 1.4 motor Vehicles a c * h h 2.0 0.8 3.0 1.2 1.1 22.61 Toxtiles andApparel i c * I f 2.6 1.0 8.0 0.4 3.9 40.6X Other Manufactures a c * * t 8.6 0.3 8.0 1.6 1.8 CUher Conwusor a c t t 3.2 0.8 3.0 1.9 2.4 TraoedServices b c * g g 2.0 0.8 0.7 0.5 0.6 Noe-Traded Services b g 0.0 0.6 (.) CES and CET functions imply that the corrsponding elasticities of subatitutIon (transformation) corr eond to comp nsated import demand (export supply) elasticities. All price elasticities if demand defined as positive numbrs. For premla estimates, a text. Column notes correspond to te sources from which estImtes are Interpolated. For Interpolation detilIs ao Tarr (198). (a) ShiellI, Deardorff and Stern (1906); (b) Dixon at *l. (1962); (e) Caddy(1976); (d) kman; (e) ownestimates; (t)Stern, Francis and Schumacher (1976); (9) Houthakkerand Taylor (1970); (h) Lovinsohn; (1)Crandall (1981); 0) BohiandRussell (1978); (k) USDA (1984); (l) Hutbauer at el (1966).10
paid by US consumersas a result of the MFA. Thus, we had to determine the marginal supplierto the US if the MFA were abolished. Data in Hamilton

(1988),allow us to determine that Hong Kong, which had a quota premium rate of 47Z for apparel sold to the US in 1984, or a supplier more efficient than Hong Kong, would be the marginal supplierif quotas were removed.12/ The US is much more competitive in textilesthan in apparel. Consequently, for textiles we take 5Z for the premium rate, which is much more conservative than the one (15Z) proposed by Cline (1987,p. 167). A positive rate,however, is indicated based on data in a study by the US International Trade Commission (1987). For autos we relied on the qualityadjustedpremia estimatesof Feenstra (1985a) for Japanese car importsby the US. For European car imports, we relied on the quality-adjusted price increase of European cars sold in the US estimated by Dinopoulos and Kreinin (1987). Our reaulting premia estimates, which are weighted averages,are 40Z for textilesa-nd apparel and 23Z for autos. 13/

4. Welfare Cost Estimates Since the restrictions are administered by the exporting c,.untries, the premia accrue to the exporting countriesrather than to the US. One can therefore distinguish two components of the costs of the QRs: (1) the income or rent transfer to foreigners; (2) the distortionary cost due to the usual consumption and production costs of protection. Table 3 summarizes these costs for each of the three industries: textilesand apparel,autos and steal. Since the restrictions on steel -- which resulted in approximately a 15Z reduction in the imports of steel starting in early 1985 -- were only implemented in 1985,we obtain the estimatesfor steelby reducing inteznediate and final consumption of imported steel

### 11

Table 3 Welfare Costs and Employment Effects of QRs: IndividualSectors

Employment b/ Change in the Economy-Wide c/ Welfare a/ IndustryLosing Employment

Gain Its QR Relocation Textilesand Apparel Remove QRs 13.06 -158.3 158.3 d/ (.15) CaptureRents 7.07 -3.3 35.2 from Foreigners (.03) Autos Remove QRs 6.9 -1.14 1.27 (.001) CaptureRents 6.2 +1.05 30.9 from Foreigners (.029) Steel Remove QRs 0.91 -20.7 22.3 (.021) Capture Rents 0.78 -0.1 3.9 from Foreigners (.004)

Notess Estimates based on central elasticities. a/ Welfare is EV measure expressedin 1984 US billion. b/ Employmentis expressed in thousand work-years. Z/ One-half of the sum of the absolutevalue of the employment changes expressed in thousand work-years. 

### d/ The numbers in parenthesesin the third column are the percentage of employees in the economy who must relocate. For example, (.15) means that fifteen-hundredths of one percent of the economy's employees must relocate.12
productsby 15Z from the observed levels in 1984. This restriction results in a 7? premium on imported intermediate steel products. The employment figures in column 2 are only for the industrysubject to quota removal,and the total economy-wide relocation of workers is presented in column 3. This latter measure is a summary of interindustry effects (see. e.g. Deardorffand Stern (1986)). The figures in Table 3 reveal that the largest welfare costs are due to the QRs in textiles and apparel. This may seem surprising since that sector is smaller than autos, and imports are 314 of auto imports in value (including premia). Furthermore the proportionof the total welfare costs due to distortionary costs are much higher in textilesand apparel. This is so because the price elasticity of demand for textilesand apparel is almost four times higher than the corresponding elasticityfor autos. 14/ Furthermore, the relative homogeneity of domesticand importedsteel reduce production costs of distortion. Because elasticity estimatesare not precise,we report in table 4
a range of welfare costs from removing all QRs simultaneously for low and high elasticities. Note that because the marginal benefits to the economy of an income transfer is a decreasing function of demand and supply elasticities, the welfare gains from capturingthe rents from foreignersis higher in the low elasticity case than in the high elasticity case. Of course thesewelfare estimate gains due to the capturingof rents from foreigners are overestimates to the extent that rent-seeking activities dissipate them. For this reason, an auction quota mechanism is superiorto a direct allocationof quota rights to imports.15/ Thus our estimateof the annual cost of QRs in these three industries for the protectionlevels in 1985 is betweenUS$21 billion and US$23 billion.13

Table 4 Welfare Costs of QRs and Tariff Protection: Long-Run Estimatesa/

Low High Elasticity Elasticity Case Case
Remore QRs 21.0 22.7 Capture Rents from Foreigners (retainQRs) 16.0 13.8 EliminateRemaining Tariff Protection 0.59 1.34 (afterQR removal) a/ Welfare is the EV measure expressedin US 1984 billion.14

It is quite probable that the US has monopsony power in its purchaseof imported autos and monopoly power in its sale of agriculture productsbecause of its relative importance in the world market for these products. We have experimented with an export demand elasticity value of 4 for agricultural products and an import supplyelasticity of 5 for autos. Insofar as removingQRs leads to an increasein agricultural exports and an increase in auto imports,the US terms of tradewill decline and hence the welfare main will be leas. For the medium elasticity case, including terms-of-trade effects lowers the welfare gain from US$20.9 billion to $19.8 billion. This effect is smallbecause of the relativeimportance of quota rents which account for two-thirds of the totalwelfare costs. Obtaining the quota rents is a pure income transferfrom the ROW to the US whose effect is a real appreciation of the dollar (about 1Z) which is accompanied by a small improvement in the terms-of-trade (the transfergain with terms-of-trade effect is about $100 million more in the medium elasticitycase than without terms-of-trade effects). Thus, the distortion gains from removingQRs with terms-of-trade effects is only $5.5 billion, about 22Z less than in the small country case. 161 It is conceivable that the US would have monopoly and monopsony power in all the sectors in which she trades. Although this seems unlikely because the US market share is usually small in her main import and export markets,we have experimented with generalized terms of trade across all sectors for the central elasticity case by assumingconstant import supply for consumer goods imports and export demand elasticities of 5 for all sectors except autos (import supply elasticity of 3) and agriculture (exportdemand elasticity of 2). 17/ The gains from QR removal are smaller,but still substantial ($16.2 billion). However, because of the terms-of-trade effects, which result i-n expanded trade volume at higher15
foreign currencyimport prices and lower foreign currencyexport prices, the share of distortionary costs in total QR costs falls from 32 percent to 8 percent of total costs. Finally,adding unilateral tariff reduction now results in a welfare loss of $2.9 billionbecause of the dominatingtermsof-tradeeffect, a result similar to those found in the global simulations mentioned in section 2. Our welfare cost estimates are significantly higher than previous GE estimatesand than mcit PE estimates. This is so for several reasons. First we properly account for the $14 billion transferassociated with the US system of QRs. Second, our results are not dominated by terms-of-trade effects. 18/ Third, in comparison with most previous PE estimates, we have benefittedfrom the detailed work on premia estimates by Feenstra (1985a), Hamilton (1986)and Dinopoulos and Kreinin (1988) which are higher than previous estimates.19,

5. Employment Table 5 presents estimates of the employment effects of simultaneous removal of QRs in textiles,autos and steel for the central elasticity case. The simultaneous removal of QRe also points out to conflicting worker interestsacross the three industries subject to QRs. While the steel and textilesand apparel sectors would lose almost as many jobs when all QRs are removed than when they are removed in their sector alone, the autos sector gain. 1,900 jobs when the QRs on steel (and textilesand apparel) are removed concurrently with the VER on autos. This is so because steel, an input into auto production is cheaper and because the income elasticity of demand for autos is high. Both effectsbenefit the domestic auto industry which expands even when QR protectionis removed.16

Table 5 Employment Changes from RemovingQRs in Autos, Steel and Textiles (Central Elasticity Case) (thousandjobs)
Agriculture 14.3 Food 1.6 Mining 4.0 Textiles and Apparel -157.6 Autos 2.0 Steel -16.2 ConsumerGoods 17.5 Other Manufacturing 78.6 Traded Services 34.3 Non-TradedServices 21.6

Given that QR protection is obtained through the political process, one can argue that the US Congress has decided to value more highly a job in the protected sectors. Since the combined QRs preserve 174 thousand jobs in textiles, autos and steel, but comes at a cost of US$20.9 billion, the annual cost per job protected in these three sectors is about US$120 thousand. This is approximately 8(3) times the average annual total compensation of workers in the textile (steel)industries. If QRs are removed, displaced workers will incur search, relocation, and retrainivg costs (seeHussa (1978)). Net benefits from QR removal are obtainedby subtracting these costs. A proxy for these costs is theadiscounted value of the displaced worker's earnings losses over his lifetime.20/ This measure allows us to estimatehow much gainers will17

have left after compensating displaced workers for their earnings losses. Earnings losses for displaced workers last approximately six years. 21/ A conservative estimateof net benefits, NB, is obtainedas

5 NB- 

### E (20.9
- C t] t-0 t (l+r)t

where r - 7? is the discount rate and Ct are estimatedearnings losses. 22/ NB is US$105 billion, with associated Benefit/Cost of 65. That is, for every dollar of earnings losses saved, the economy loses $65.

6. Conclusions In the introduction, we said that PE estimatesare upward biased because they fail to include the balance of trade constraint. An order of magnitudeof the difference between PE and GE estimatesdue to this effect is obtainedby solving the model with a fixed real exchange rate and hence an endogenoustrade balance. This would correspond to what is typically done in PE estimates. For the central elasticityspecification, removing all QRs would lead to a current accountdeterioration of US$11 billion and
an EV estimate of US$33 billion. This estimate is about one and a half times the estimate obtained when the balance of trade constraintis properly taken into account. Economy-wide welfare costs estimatesderived by adding up individual industry PE estimates are likely to be significantly upward-biased. Perhaps the most striking result is the relative costs of protectionfrom NTBs and from tariffs. While this is repeatedly mentioned

### 18

In policy discussions, few relative estimatesare available.The figures in table4 suggest thatthe welfare costof tariff protection is between 3Z (lowelasticity case) and 6Z (high elasticity case) of the welfare costof QRs in textiles, autos and steel. Since there are otherQRs in the US beyond those examined here,thisestimate is a lower bound. An alternative way to evaluate the costs of QRs is to askwhat tariff structure would give the same welfare lossas existing QRs in the threesectors.Returning to the central elasticity estimates, in that case the total welfare cost is estimated at US$20.9 billion of which1984US$6.7 billion is the distortionary component. For that set of elasticities, movingfromthe actual tariff structureto a uniform tariff structure yielding the same (importweighted) average protection would represent a welfare gain of US$0.60 billion. (Removing tariffs altogether would givea welfare gain of US$0.94 billion.) Starting from the existing tariff dispersion, to get the distortionary cost element of QRs would require multiplying each tariff by 3.8 times its 1984value, which would amount to an average(import weighted) nominal protection of 152. Adding the loss due to renttransfers would requiremultiplying tariffs by 6.9 timestheir 1984value amounting to an average protection of 252. 23/ It is no exaggeration to say that,in terms of protection costs, QRs are taking us back to the earlydays of multilateral tariff negotiations, especially if one includes the rent transfer element.19

Footnotes 1/ See Baldwin (1984), Tumlir (1985) and Riedel (1986)on the political and economiccauses for this shift in approachto trade policy. For the US, the shift towards discriminatory trade policy is associated with a combination of the decline in US hegemonypolitics and an increase in governmentintervention. 2/ Appendix A lists the equations describingthe model, the endogenous and exogenous variablesand details the functionalforms. 3/ Consumption demand is represented by the linear expendituresystem which is derived from the associated Stone-Geary utility function. The welfare measure used here is describedin Varian (1984), who uses the term expenditure function rather than cost function,and Deaton and Muellbauer (1980). 4/ The ten sectors ares agriculture (1); food (2);mining (3); textiles and apparel (4); autos (5); steel (6); consumer goods (7); other manufacturing (8); traded services (9); non-tradedservices (10). All sectors are traded with the exception of sector (10). See Appendix B and Tarr (1988) for details on aggregation. 5/ The CET was first introduced by Powell and Gruen (1967)and has been adoptedby Dixon et al. (1982) in the ORANI trade model. 6/ The large country assumption is always assumed in multi-country models (e.g. Deardorffand Stern, 1985; and Whalley, 1985). de Melo

(1986) and Brown (1988) argue that the product differentiation assumptionadopted in multicountry models overstates the extent of monopoly power countriesare likely to have. Also see Deardorffand Stern (1986,p. 61) for a similarview. 7/ The (constant) elasticities are: import supply of autos (5.0); foreign elasticity of demand for US agriculture exports (4.0). 8/ If market clearingwas not allowed one would need to use virtual prices in Hicksian demand curves along the lines suggested by Neary and Roberts (1980) as for example in Grais, de Melo, and Urata (1986). 9/ An importantexception is the single countrymodel of Harris (1984) in which unilateral free trade by Canada is shown to be welfare improving. 10/ As the sources for table 2 detail, the estimates were obtained from many studies. These studies generally provide standarderrors of estimates. For those elasticities taken from Stern, Francis and Schumacher, the high and low estimatesare generally the high and low estimates from their survey which are not standard-deviation-based. In a few cases the high and low estimatesare obtainedby doubling and halving the central estimate. See Tarr (1988, ch. 5) for details.

### 20
11/ For example, doubling (halving)the elaiticity estimates in column (3) incre4ses (decreases) our estimates of the welfare gains with the central elasticity estimatesfrom US$20.9 billion to $21.0 ($20.8) billion, respectively, or + 0.42. 12/ We note that estimatesof quota premia, in both textiles and automobiles, vary fromyear to year. We obtained estimates of quota premiafor 1984, the year for which we benchmarked themodel. Thus, our estimates apply to the conditions prevailing in thatyear. For other years, the premia rates and our cost estimates may differ. 13/ If the marginal supplier is more efficient than HongKong,our premium rateestimate is conservative and the associated welfare gain estimate is downward-biased. 14/ In his study of the similar arrangement for quotaright distributions amongcheese exporters to the US, Anderson(1985) comes to similar conclusions, i.e. that the distortionary costs coming from the bilateral quota arrangements is extremelyhigh. Had we further disaggregated textiles and apparel as Anderson did in his study of cheese quotas, we wouldhave found evenhigher welfare costs. 15/ See Elliott, Sohctt and Takacs (1987) for an appraisal of sucha proposal for US trade policy. 16/ If one interprets the individual welfare estimatesin table3, as linear approximations to the nonlineardemand and supply curves in themodel, then the sum of the individual estimates will underestimate the total welfare gain. This is indeed so, but the underestimate is small: for the small country case,the underestimate from table3 is only $30million. Thisnon-linearity effect is evenmore important for the relativeiylarge welfare equivalent (toQRs) of uniform tariffs reported below. 17/ It should be noted that, in the presence of a balance of trade constraint, the export demand and import supply elasticities are not independent (see Whalley and Yeung, 1984)and,alongthe offercurve will be less in absolute value than the figures citedin the text (see Jonesand Berglas, 1977). The numerically calculated valuefor the aggregate export demand elasticityis -4.6;thenumerical value for the aggregateimport supply elasticity (including intermediates with the small country assumption maintained) is 6.3. 18/ For example, Whalley(1985, table10.2)estimates welfare losses from US unilateral NTB removal and US unilateraltariff removal. Deardorff and Stern (1986, table4.6)obtain small welfare gains. 19/ See Tarr (1988, chapter 2) for a comparison of our results with PE estimates. 20/ We call our estimate a proxy for these adjustment costs because we havenot incorporated intoour modelan endogenous sector that moves resources, as suggested by the theoretical workby Mussa.21
21/ See Jacobson (1978). To be conservative, we measure total compensation losses, which exceed earnings losses by the amount of fringe benefits. Morkre and Tarr (1980, Chapter 3) discuss the merits of this measure and the alternative unemployment cost measure. 22/ The estimate is conservative since earnings losses are zero after six years, while yearly benefits do not decay. 23/ In that experiment, we are increasing the variance of nominal protection by 3.8 and 6.9 times the varianceprevailingin 1984. Since the distortionary costs of tariff protectionis positively related to the average level of protection and to the variance of tariffs [see Johnson (1962)], anotherhypothetical calculation would consist of computingthe average tariff under the assumption of no tariff dispersion across sectors. In that case, startingfrom a uniform tariff protection (3.5Z) equivalent to the existing tariff protection in 1984, the distortionary cost element of QRs would require an average uniform protection of 24Z. Adding the rent transfer loss would raise the average uniform protection to 48Z. With linear, rather than constant elasticity demand and supply curves,welfare calculations would yield lower estimates as the corresponding elasticities would increaseas one moves up the demand and supply curves.22

References Anderson,J.E. 1985. "The Relative Inefficiency of Quotas: The Cheese Case." American EconomicReview,pp. 178-90. Balassa, B. and C. Balassa. 1984. "Industrial Protectionin the Developed Countries.* The World Economy,pp. 179-196. Baldwin,R.E. 1982. The Inefficacy of Trade Policy. PrincetonUTniversity, Frank D. Graham Memorial Lecture, Essays in International Finance,No. 150. Baldwin,R.E. 1984. 'The ChangingNature of U.S. Trade Policy SinceWorld War II." In R. Baldwin and A. Krueger,eds., The Structureand Evolutionof Recent IT.S. Trade Policy. Chicago, The Universityof Chicago Press, pp. 5-32. Baldwin,R.E., J. Mutti, and D. Richardson. 1980. 'Welfare Effects on the United States of a Significant Multilateral Tariff Reduction," Journal of International Economics, vol. 10, pp. 405-23. Bohi, D. and M. Russell. 1978. LimitingOil Imports: An EconomicHistory and Analysis. Baltimore: Johns HopkinsUniversity. Brown, D.K. 1988. "Tariffs, the Terms of Trade and NationalProduct Differentiation,' Journal of Policy Modelling (forthcoming) Caddy, V. 1976. "Empirical Estimation of the Elasticity of Substitution: A Review." Preliminary Working Paper OP-09, IMPACT Project. IAC, Melbourne, Australia. Cline, W. 1987. The Future of World Trade in Textiles. Washington, D.C.: Institute for International Economics. Collyns, C. and S. Dunaway. 1987. 'The Cost of Trade Restraints: The Case of JapaneseAutomobile Exports to the United States." IMF Staff Papers, pp. 150- Deardorff, A. and R. Stern. 1986. The MichiganModel of World Production and Trade. Cambridge, Massachusetts, MIT Press. Deaton, A. and J. Muellbauer. 1980. Economiesand ConsumerBehavior. Cambridge University Press. Dinopoulos, E. and N. Kreinin. 1988. "Effects of the U.S.-Japan Auto VER on EuropeanPrices and U.S. Welfare.' Review of Economicsand Statistics (forthcoming). Dixon, P., B. Parmenter, J. Sutton, and D. Vincent. 1982. ORANI: A Multisectoral Model of the Australian Economy. North-Holland, Amsterdam.23
Elliott,R., J. Schott, and W. Takacu. 1987. AuctionQuotat and U.S. Tradb Bolicy. Washington, D.C.: Institute for International Economics. Feenstra,R. 1984. "Voluntary Export Restraintsin U.S. Autos, 1980-1: Quality,Employment and Welfare Effects." In R. Baldwin and A. Krueger,eds., The Structure and Evolution of Recent U.S. Trade Policy. NBER, Chicago: University of Chicago Press. Feenstra, R. 1985a. 'Quality Change Under Trade Restraints: Theory and Evidence from Japanese Autos." Discussion Paner No. 298, Columbia University. (Forthcoming in the Quarterly J%. .rnal of Economics.) Feenstra,R. 1985b. 'Automobile Prices and Protection: The U.S. Japan Trade Restraint." Journal of Policy Modelling, vol. 7, pp. 49-68. Grais, W., J. de Melo, and S. Urata. 1986. "A General EquilibriumEstimation of the Effects of Reductions in Tariffs and Quantitative Rest''ctions in Turkey in 1978.' In T.N. Srinivasanand J. Whail , eds. Hamilton,C. 1988. 'Restrictions and International Transmission of the 'New' Protectionism' in Issues ir. US-EC Trade Relations, edited by R. Baldwin,C. Hamilton,and A. Sapir,Universityof Chicago Press for NBER. Harris,R., 1984. 'Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition," AmericanEconomic Review,pp. 1016-32. Hufb&uer, G., D. Berliner,and K. Elliott. 1986. Trade Protectionin the United States: 31 Case Studies. Institute for International Economics, Washington, D.C. Isard, P. 1978. wHow Far Can We Push the Law of One Price.' American Economic Review.pp. 942-8. Jacobson, L. 1978. 'Earnings Losses of Workers Displaced from Manufacturing Industries,' in W. Dewald, ed., The Impact of International Trade and Investment on Employment, U.S. Department of Labor, pp. 87-98. Johnson,H.G. 1960. *The Cost of Protection and the Scientific Tariff," Journal of PoliticalEconomy,pp. 327-45. Jones, R. and E. Berglas. 1977. 'Import Demand and Export Supply: An Aggregation Theorem,' AmericanEconomicReview, pp. 183-7. Keesing, D. and M. Wolf. 1980. Textile Quotas Against Developing Countries. London, Trade Policy ResearchCentre.24
Levinsohn, J. 1988. 'Empirics of Taxes on Differentiated Products: The Case oE Tariffs in the U.S. AutomobileIndustry.' In R.E. Baldwin (ed.), Trade Policy Issues and Empirical Analysis,University of Chicago Press. Melo, J. de. 1986. 'A Comparison of 502 Multilateral Tariff Reductionsin Two Global Trade Models.' In T.N. Srinivasan and J. Whalley, eds. Morkre, H.. and D. Tarr. 1980. The Effects of Restrictions on U.S. Imports: Five Case Studies and Theory. Bureau of Economics Report to USFTC. Mussa, H. 1978. 'Dynamic Adjustment in the Hecksher-Ohlin-Samuelson Model,' Journal of Political Economy,pp. 775-91. Powell,A. and F. Gruen. 1967. 'TheConstant Elasticity of Transformation Production Frontier an.d Linear Supply System,' International EconomicReview, pp. 315-28. Riedel,J. 1986. 'Trade Policy in the United States: From Multilateralism to Bilateralism.' Mimeo, Johns Hopkins,SAIS, Washington, D.C. Shiells,C., R. Stern and A. Deardorff. 1986. 'Estimates of the Elasticities of Substitution Between Imports and Home Goods for the United States.' Weltwirtschaftliches Archiv, pp. 497-519. Srinivasan, T. and J. Whalley, eds. 1986. General Equilibrium Trade PolicyModeling. Cambridget MIT Press. Stern, R.M., J. Francis and B. Schumacher. 1976. Price Elasticities in International Trade: An Annotated Bibliographer. London: MacmillanPress. Tarr, D. 1988. 'A General Equilibrium Analysisof Quotas on US Imports., Mimeo, USFTC. Tarr, D. and H. Morkre. 1984. Aggregate Costs to the United States of Tariffs and Quotas on Imports: GeneralTariff Cuts and Removal of Quotas on Automobiles, Steel, Sugar, and Textiles. FederalTrade Commission. Tumlir,J. 1985. Protectionism: Trade Policy in DemocraticSocieties. Washington, D.C. American EnterpriseInstitutefor Public Policy Research. US International Trade Commission. 1987. U.S. Global Competitiveness: The US TextileMill Industry,Publication No. 2048. Varian, H. 1984. Microeconomic Analysis. New York, Norton. Whalley, J. 1985. Trade Liberalization Among Maior World TradingAreas. Cambridge, Massachusetts: MIT Press.25
Whalley,J. and B. Yeung. 1984. "External Sector 'Closing Rules' in Applied General Equilibrium Models,' Journal of International Economics, vol. 16, pp. 123-38. Winston,C. and Associates. 1987. Blind Intersection? Policy and the AutomobileIndustry. Washington, D.C. BrookingsInstitution.26
AppendixA Model Equations
NotationVariable subscriptsindicate sectors. If double subscripts are employed,the first subscript denotes the sector of origin, the second the sector of destination. Upper case letters are reservedfor endogenous variables, unless they have a bar, in which case they are exogenous variablesor normalization constants. Parametersand policy variablesare denotedby Greek or lower case Latin letters. There are i,j-l,...,n sectors, of which k-l,...,l are traded and the remainder m-l+1,...,n are non-traded. The index k(m) is reservedfor traded (non-traded) sectors. NT refers to non-tradable sectors; T refers to tradablesectors. Constant elasticity of substitution (CES) and constantelasticity of transformation (CET) functionsare used throughout. To save on notation,
we note first that CES and CET functionscan be written analogously in the 

### I form X-CES (X 1 , X2 ; al' 1-m1, p, A) whereo- p ; 1 py in the CES



### 1 case and o - 1 ; 1 < p c * in the CET case. To further save on notation,
we write the unit dual cost functions associated with the CES (CET) functionsas PX - CES (CET) (PX 1 , PX 2 ; a, o) where PX is the price of X and PX 1 and PX 2 the prices of XI and X2 . EquationsListing Equation (1) is unit average- marginal costs under the postulated technology (see table 1 in the text). Factor demands (equations 2-3) are obtaified from Sheppard'slemma. The assumption of fixed factor endowments is reflected in equation (4). Equations (5-8)describe the choice between27

Table Al EquationsListin:

1. Unit Cost
n (1) CVi -CESi (W, R; ai, 

### oi' ADi) + 

### El aii Xi PC3i 2. Factor Markets (2) K 1 - XDi CVi 

### (R/(l-ai))
'3) Li , XD( ¢i) CvI 

### (W Ma) 

### d

- d
- (4) E L LS; EK -KS i i ii 3. Intermediate ProductsDemand (5) Vji CESi (VMji,VD 5 ,6 c", ACi 

### ) (6) VD /VMj 1 - ((l-6 )IU )ac (PDIPMI ) 3 (7) VMji 

## -O j e NT (8) V -j aij XDi 4. Output Allocationfor Tradables (9) XDk
- CETk (Ek, Dk; 7 k' °tk' 

## Ak) -(tk °rtk (lO) D k/E k

- ((1-70)/7k) (PD k/P k)28

Table Al (continued) 5. Cost Prices (11) PSk
- CETk (ppk PDk; 7 k' tk' kY; PS
- PDm (12) PCij CESj (PHIi PDi; 5it oci, AC ); PCj PDm (13) PNi -PSi E ai PCji 6. Definition of InternalPrices of Traded Goods (14) PEk
- PWEk ER (15) PWI - PVk (l+timk) (l+prki) ER (16) PMk
- P % (1+tmk) (l+prck) ER 7. Import Supply; Export Demand

_ t-" (17) PE k- PIWEk or Ek iEk (PWE k) sk k>O (18) PWMk

- PWk or Ck

- Ck (PWMk) ;k > ° flk < a for agriculture; k < S for autos S. ConsumerDemand and Market Eauilibrium (19) CD 1 ' xd + 

### Ipd PDi) (Y

- COMIT) (20) CMk . X 

# + ( <k PHj) (Y

- COMIT)
where COMIT
- E d PD 1 + 

### E PI4; EPi+EPkh1 J~ J k i (21) VTDi

- VD : VTM -E VMk (21) VTD 1 -k j (22) D -VTD 

### + cd I i i29

Table Al (continued) 9. Rationing (23) VTMk VTMk 4 PMIkj> PMIk ( k+P,)
(24) CH. - 4 PMV > PM. k
- textiles,autos, steel 10. Rents on Rationed Sectors (25) RENTCk t (
- PHk) CHk + prck PWMk 

### CMk (l+tmk)ER (26) RENTIk - 

### E (PI4Ij

- PHI') VMHk + 

### E VMk (l+tink) prik ER 11. GovernmentRevenue (GR), Trade BalanceConstraint (B) and Income Definition (Y) (27) GR - 

### E (PMVkVTMk timk + P%Ik CMk tmk) ER k (28) E - (PWEkEk

- PWHkCMk

- PWk VTMk) k

- 0. (RENTCk+ RENTI) /ER
(29) Y - WLS + RRS + GR + (1-0k) (RENTCk + RENTIk) -B R k 12. Numeraire (30) 1

- 

### E PDj XD° 

### E P 

### XD'30
domestically and foreign produced intermediates. The allocation of domesticproduction between domestic and export sales is described in equations (9-10). Cost minimizing prices associated with the selected technology appear in equations (11-13). The relation between border and internal prices is given in equations (14-16). These equationsallow for the existenceof rationing in the base year in which case the premia rates prik, prck are positive. For sectors with no rationing, prik
- prck - 0. The assumption of endogenous world prices for final import supply (for autos) and export demand (for agriculture) is reflected in equations 17 and 18. Consumer demand is described in equations 19 and 20 and sectoral supply-demAnd equilibrium is given in equation (22) after aggregating intermediate demandsby sector of origin. Becauae the textilesand apparel and auto sectorswere rationedin 1984, we have allowed for the presence of rationingin the base year (see equations 15 and 16). When a sector is rationedthe premium inclusive price (denoted with a superscript v) exceeds the corresponding internal price defined as the world price inclusive of border taxes and expressed in domesticcurrencyunits. Thus, for example,rationingof consumer demand for autos implies P<> > PMk, k

- autos. Likewise, when total intermediate supply of importedintermediates originating in sectork is rationed,PMI,j > PMIk by an endogenously determinedamount PRk which depends on the extent of rationing. When there is no rationing PM4t
- PMk and PMI'j
- PMIk,Vj These assumptions are reflected in equations (23) and (24). Rents on rationedsectors are collected in equations (25) and (26). What portion of total rents goes abroad is determined by the parameter9 k in equation (29).31

Table A2

Number of Endopeneous Variables Variables CVi

- Unit costs n xi

- Sectoral capital stocks n Ldi . Sectoralemployment n Vii

- Compositeintermediate purchasesof sector i from sectorj n2 VDji

- Domestic intermediate purchasesof sector i from sectorj n2 VHji

- Imported intermediate purchabesof sector i from sector j n(n-l) XDi

- Gross output of sector i n Di

- Supply for domestic sales n Ek

- Supply for export sales m PSk

- Unit price of composite domestically m produced traded goods PDi

- Unit price of domestically sold goods n PCij

- Unit price of composite intermediate product of sector i sold to sectorj n2
PNi

- value-added price of sector i n PEk,PWEk

- Domesticand border price of exports from sectork (NotesPWEk mostly exogenous) m32

Table A2 (continued)

PMk (PM1),PVM4 , Domestic, (premiuminclusive) and border price of consumer imports of sector k (Note: PVHk mostly exogenous) 2m PMIk,(PMIl) Domestic, (premiuminclusive) price 2m RENTCk,RENTIk

- Rents on consumer and intermediate imports 2m VTDi.VTMk(PHIk)
- Total domesticand import intermediate demands; (Premium on imported 2m+n intermediate) CHk,CDi

- Consumer demand for imports and domestically produced goods m+n GR,Y,ER

- Governiment revenue from tariff collection, disposableincome net of transfersand real exchange rate 3 W,R

- Wage, rental rates 2
TOTAL 3n 2 +n(n-_)+9n+12m+5

Note: Number of endogenous variables varies accordingto model closure. (See text).33
Finally the balance of trade constraintin foreign currency units (equation 28), the overall budget constraint (equation 29) and the numeraire (equation (30) close the model. Note that the choice of numeraire implies that the (endogenous) variable ER represents the real exchange rate. Thus when we fix the real exchange rate,we fix ER to its base year value and free the balance of trade B. Table A2 lists the endogenous variables in the model. For our ten sector application with nine traded sectors and inflnite trade elasticities, the model reduces to a system of [3n 2 +n(n-l)++9n+12m+151-3m simultaneous equations since premia and virtual prices minus tariff inclusive prices are positive (zero) when quotas are binding (not binding).34
&ppendixB Data Sources and Data Preparation

The model is calibrated from the 

### 80x80interindustry(I/O) flow matrix for 1982 commissioned by the US Forest Service. However, since 1982 was a recession year, after aggregating the 110 table to our ten-sector aggregation, we updated the table to 1984. The updatingwas done by applying the 1982 value added to gross output ratios to the 1984 value added figures published in the July 1986 Survey of CurrentBusiness. (Details of the mapping are provided in Tarr, 1988,Appendix). For imports and exports, we aggregated the seven digit level data publishedby the US Customs Service. For traded services, we used the data in the Survey of CurrentBusiness of June 1986, table 4.1. Next we correctedthe data where they seemed inaccurate (e.g.we relied on US Census publication FT-990 for import and export data for Iron and Steel). Data on tariffs was obtained from the US Departmentof Commercepublication FT-990, of December 1984, p. A-17. Finally we scaled the trade data from the Census to make it consistent with the merchandiseimport and export data from the NIPA. Next we made the necessary adjustments so that all flows are measured in US producerprices by using the data on the share of transportation and wholesaleand retail trade embodied in the export data by using the estimates in the Survey of Current Business Table A of May 1984. Sectoral consumption is determined residually from sectoral material balance equations. One final manipulation on the I/O data was requiredsince the I/O flow matrix is a total matrix that does not separatedomesticfrom foreign intermediate input use. Following the procedure suggested by Dervis, de35


### Melo and Robinson, General Equilibrium Mcoelsfor Develooment Policy (1982, chapter 5) and adopted in previous studies of the US, we assume that the domestic use ratioin each sector is the same for all components of demand. Unfortunately, this is the closest approximation thatcan be achieved with existing information. Data on employment was obtained from the US Department of Labor publication, Employment and Earnings,January 1985, pp. 186-9. Capital stock estimates were constracted from the first order conditions for sectoral labor and capital demand, an estimate of the wage ratefromNIPA data,and an estimatedrate of return on capital of 5.82obtained from Survey of Current Business, August 1986 and July 1987. (Details are in Tarr1988,chapter 4).PPR WorkingPaper Series Title Author Date Contact WPS63 Does Japan ImportLess Than It Should? Kenji Takeuchi July 1988 J. Epps 33710 WPS64 Cocoa and Coffee PricingPolicies in Cote dlivoire Takamasa Aklyama August 1988 D. Gustafson 33714 WPS65 Interaction of Infant Mortalityand Fertility and the Effectiveness of Healthand Family PlanningPrograms HowardBarnum July 1988 S. Ainsworth 31091 WPS66 Slowingthe Stork: BetterHealth for Women throughFamily Planning AnthonyR. Measham July 1988 A. Manciano Roger W. Rochat 33226 WPS67 Price and Tax Poiicy for SemiSubsistence Agriculturein Ethiopia Robert D. Weaver August 1988 D. Gustafson Saad All Shire 33714 WPS68 A Comparison of Lamps for Domestic Lighting in Developing Countries Robert van der Plas WPS69 Does Local Financing Make Public PrimarySchoolsMore Efficient? The Philippine Case Emmanual Jimenez August 1988 T. Hawkins VicentePaqueo 33678 Ma. Lourdes de Vera WPS70 Vocational Education and Economic Environments: Conflictor Convergence? Arvil V. Adams August 1988 T. Hawkins AntoineSchwartz 33678 WPS71 SchoolEffects on StudentAchievement in Nigeriaand Swaziland Marlaine Lockheed August 1988 T. Hawkins Andre Komenan 33678 WPS72 The RelativeEfficiency of Public Schools in Developing Countries Emmanuel Jimenez August 1988 T. Hawkins Marlaine Lockheed 33678 VicentePaqueo WPS73 Taxationand OutputGrowth in Africa Jonathan Skinner August 1988 A. Bhalla 60359PPR WorkingPaper Series Title Author Date Contact WPS74 Fiscal Stabilization and ExchangeRate Instability:A Theoretical Approach and Some PolicyConclusions Using MexicanData Andrew Feitenstein August 1988 A. Bhalia StephenMorris 60359 WPS75 WelfareDominance and the Design of ExciseTaxation In the Cote dlIvoire ShlomoYltzhaki August 1988 A. Bhalla Wayne Thirsk 60359 WPS76 On the Shadow Price of a Tax Inspector ShlomoYitzhaki YitzhakVakneen WPS77 Incentive Policiesand Agricultural Performancein Sub-Saharan Africa Bela Balassa August 1988 N. Campbel 33769 WPS78 Economists, Institutions and Trade Restrictions:A ReviewArticle J. MichaelFinger WPS79 Quantitative Appraisal of Adjustment Lending Bela Balassa August 1988 N. Campbel 33769 WPS80 Emerging Issues of Privatization and the Public Sector Samuel Paul September1988 E. Madrona 61711 WPS81 ReachingPeopleat the Periphery: Can the World Bank's Population, Health,and Nutrition Operations Do Better? RichardHeaver WPS82 Microeconomic Theory of the Household and Nutrition Programs Dov Chernichovsky September 1988 S. Ainswori Linda Zangwill 31091 WPS83 WelfareCosts of U.S. Quotas in Textiles,Steel, and Autos Jaime de Melo September 1988 C. Cabana David Tarr 61539 WPS84 Black Markets for ForeignExchange, Real ExchangeRates and Inflation: Overnight vs. GradualReform in Sub-Saharan Africa Brian Pinto