The paper investigates the impact of an increase in tourism and a change in the terms of trade on the welfareofdifferentclassesinaneconomy. Wesetupathree-sector,three-factor(onespeciﬁc)model of general equilibrium to derive the results. The most important result we obtain is that tourism can immiserize the poor. In the concluding section we argue that a tax on tourism (a non-distortionary tax) should be used to subsidize the poor and restore their welfare level.
Dr. Bharat R. Hazari
Lattice Analytics Pty Ltd., Melbourne, Australia.
Dr. Jianjing Lin
Department of Economics, Rensselaer Polytechnic Institute, 110 8th St, Troy, NY 12180, USA.
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