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Buy National or Buy International ? The Optimal Design of Government Spending in an Open Economy

Title data

Larch, Mario ; Lechthaler, Wolfgang:
Buy National or Buy International ? The Optimal Design of Government Spending in an Open Economy.
In: International Review of Economics and Finance. Vol. 26 (2013) . - pp. 87-108.
ISSN 1059-0560
DOI: https://doi.org/10.1016/j.iref.2012.08.010

Abstract in another language

Should governments only purchase domestic goods to increase welfare? And would government spending be higher if it was used for domestic goods only? Such proposals, which we call Buy National, were discussed in many countries in the context of the fiscal stimuli used to fight the recent global recession. We augment a simple trade model by government spending and find that the optimal size of government spending of Buy National is higher than the optimal level of government spending that does also include foreign-produced goods (Buy International). However, even though the optimal level of government spending is higher, real GDP and hence welfare are both lower in the Buy National regime.

Further data

Item Type: Article in a journal
Refereed: Yes
Keywords: Buy American; Buy International; Buy National; Optimal government spending
Subject classification: E62 F40 H30 H87
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Economics > Lehrstuhl Volkswirtschaftslehre VI: Empirische Wirtschaftsforschung
Faculties > Faculty of Law, Business and Economics > Department of Economics > Lehrstuhl Volkswirtschaftslehre VI: Empirische Wirtschaftsforschung > Lehrstuhl für Volkswirtschaftslehre VI: Empirische Wirtschaftsforschung - Univ.-Prof. Dr. Mario Larch
Faculties
Faculties > Faculty of Law, Business and Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences > 330 Economics
Date Deposited: 14 Oct 2015 12:20
Last Modified: 14 Oct 2015 12:20
URI: https://eref.uni-bayreuth.de/id/eprint/16621