NADS Held 16th "Theory and Policy" Seminar

Trade and Welfare Effects of Export Tax:

Theory and Evidencefrom China’s Incomplete Export VAT Rebate

Speaker: LU Yi, Professor of the School of Economics and Management, Tsinghua University

Moderator: LIU Qin, Professor of the NADS, RUC

Time: Oct. 24, 2018, Wednesday, 14:00-15:30

Venue: 916 Meeting Room, Chongde Building West Wing, RUC

Abstract:

We study trade and welfare implications of export taxes in a full-fledged multi-sector Ricardian model with import tariffs. We apply our framework on China’s incomplete export value added tax (VAT) rebate where VAT and its export rebate combined serve as a de facto export tax. We find that reducing export rebate that effectively increases export tax benefits China’s overall welfare because its positive terms of trade effect dominates the negative volume of trade effects. Our results echo the empirical research that highlights the encouraging impacts of export rebates on trade, but we underscore the direct tax revenue which is more important for welfare in making trade policy recommendations. In addition, the export tax, through its equivalence to the import tariff a la Lerner (1936), is a largely unnoticed but well-qualified trade policy tool.

Introduction of LU Yi:

He is a professor at the School of Economics and Management of Tsinghua University. He obtained a bachelor's degree from the School of Life Sciences of Fudan University in 1999, a master's degree from the School of Management of Fudan University in 2003, and a PhD degree from the School of Economics and Business of the University of Hong Kong in 2007. He has served as an assistant professor of research at the School of Economics and Business of the University of Hong Kong and an assistant professor and long-employed professor of economics at the National University of Singapore. In 2017, he was appointed as a Distinguished Professor of Changjiang Scholars. He is mainly engaged in researching the international trade and Chinese economy. He has published dozens of papers in international economic journals such as American Economic Journal: Applied Economics, Review of Economics and Statistics, Journal of International Economics, Journal of Labor Economics, Journal of Development Economics and Journal of Urban Economics. Since 2017, he has served as Associate Editor of the Journal of Comparative Economics and Journal of Economics.