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How Fiscal Mismanagement May Impede Trade Reform: Lessons From An Intertemporal, Multi-Sector General Equilibrium Model For Turkey

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  • Xinshen DIAO
  • Terry L. ROE
  • A. Erinç YELDAN

Abstract

We utilize a multi-sector general equilibrium model based on intertemporally optimizing agents to study issues of trade liberalization and fiscal adjustments in the context of the Turkish economy. A key feature of the model is its explicit recognition of the distortionary consequences of excessive borrowing requirements of the public sector through increased domestic interest costs. The model results suggest that the postponement of adjustment to growing public debt and fiscal imbalances could be detrimental; and that in the absence of coordinated fiscal reforms, the welfare gains expected from trade liberalization may significantly be negated.

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Bibliographic Info

Article provided by Institute of Developing Economies in its journal Developing Economies.

Volume (Year): 37 (1999)
Issue (Month): 1 (03)
Pages: 59-88

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Handle: RePEc:bla:deveco:v:37:y:1999:i:1:p:59-88

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Cited by:
  1. Kenc, Turalay & Sayan, Serdar, 2001. "Demographic shock transmission from large to small countries: An overlapping generations CGE analysis," Journal of Policy Modeling, Elsevier, Elsevier, vol. 23(6), pages 677-702, August.
  2. Mohamed Ali Marouani, 2007. "Is the End of the MFA a threat for the Tunisian Economy?," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2007/05, DIAL (Développement, Institutions et Mondialisation).
  3. Selim Aren & Lutfihak Alpkan & Bulent Sezen & Ziya Alper Guncu, 2011. "Drivers of firms’ debt ratios: evidence from Taiwanese and Turkish firms," Journal of Business Economics and Management, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(1), pages 53-70, May.
  4. Marouani, Mohamed A., 2005. "The Impact of the Multifiber Agreement Phaseout on Unemployment in Tunisia: A Prospective Dynamic Analysis," Center for European, Governance and Economic Development Research Discussion Papers 39, University of Goettingen, Department of Economics.
  5. Bayar, Ali. & Diao, Xinshen & Yeldan, A. Erinc, 2000. "An intertemporal, multi-region general equilibrium model of agricultural trade liberalization in the South Mediterranean NICs, Turkey, and the European Union," TMD discussion papers, International Food Policy Research Institute (IFPRI) 56, International Food Policy Research Institute (IFPRI).
  6. Marouani, Mohamed A., 2005. "The Impact of the Multifiber Agreement Phaseout on Unemployment in Tunisia: A Prospective Dynamic Analysis," Center for European, Governance and Economic Development Research Discussion Papers 39, University of Goettingen, Department of Economics.
  7. Pereira, Matheus Wemerson Gomes & Teixeira, Erly Cardoso, 2008. "Economic Impacts of Brazilian Indirect Tax Reduction: An analysis of the competitiveness within MERCOEURO," Working Papers in Applied Economics, Universidade Federal de Vicosa, Departamento de Economia Rural 53440, Universidade Federal de Vicosa, Departamento de Economia Rural.

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