ABSTRACT
Key concepts: tariffs in an open economy; terms of trade; optimum tariff; international fiscal coordination; second-best taxation; tax integra tion; Ramsey optimal taxation.
18.1 INTRODUCTION
Traditionally, public economics has been the subject for a closed economy. Open economy considerations were thought to be in the domain of inter national economics. However, the theory of international economics had a considerable amount to say about tariffs and quotas but relatively little about corporate and personal taxes in the open economy.
