The economic analysis of government policies

by Ab Iorwerth, Aled

My thesis contains three sections that use economic theory to andyze goverment policies in the areas of international trade and public riance. The h t papa models how individuals accumulate skills and how their skill choices lead them to select into different types of occupations which Mer according to their remuneration of skill. In a small open economy this in turn determines the industrial structure of an economy. An analysis is then carried out of the impact of taxation, technological change and trade on the amount of ski11 accumulated in an economy and on the income distribution. Using a mode1 of imperfect information and consumer lea.t-ning, the second paper first models why a foreign fbm would wish to dump its product into the domestic market. A low initial price is instituted because the foreign firms' product is unknown in the home country. A low price encourages domestic consumers to experiment with this product. An analysis is then conducted regarding the welfare effects of antidump ing policies on the national welfare of countries that introduce such measures- The third section examines taxation when household production is present and, in particular, examines the optimal taxation of inputs into household production. The hst section examiries the impact of hed costs in household production on the pattern of optimal taxation. The presence of such fked costs implies that a narrowly based tax, su& as the -ManufactuersY Sales Tax, would be preferred to a more comprehesive GST. The second section uses a similar Eramework to examine the impact of the exemption of food in the GST where food is treated as an input good into household meal provision. Taxing food heavily would offset the tax fkee nature of time spent in household production.