Browsing by Author "Freire, Miguel Moreira Santana"
Now showing 1 - 1 of 1
Results Per Page
Sort Options
- The neutrality of border adjustments revisitedPublication . Freire, Miguel Moreira Santana; Teles, Pedro Miguel Pinho deI study the economic effects of border adjustments, which consist in fiscal arrangements that ensure that goods are taxed at destination. This issue has been recently discussed in the context of policy proposals in the United States. I present the classical result that border adjustments are neutral, and revisit two cases in which this proposition may fail. First, border adjustments may distort relative prices when applied to certain indirect tax systems. Second, border adjustments may have effects on government revenue and on the balance of payments. I argue that the first failure of neutrality is not empirically plausible and thus has no place in shaping fiscal policy, but that the second failure may provide a motive to employ border adjustments.