The Theory of Effective Protection in General Equilibrium: Effective-Rate Analogues of Nominal Rates

Abstract

The theory of effective protection in general equilibrium: effective-rate analogues of nominal rates. This paper provides explicit conditions for the existence of measurable indices of effective protection that yield information about certain quantities comparable to the information obtainable from nominal rates in the absence of intermediate goods. These conditions enable one to address the basic issues in the multi-commodity theory of effective protection without the usual reliance on extensive, tedious mathematical manipulations. The specific results that emerge tend to emphasize both the extremely severe nature of the technological restrictions necessary for a simple measure to be correct and also the great sensitivity of such a measure to the specification of exactly what the object of interest is.

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