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Trade Liberalization in General Equilibrium: Intertemporal and Inter-industry Effects

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  • Lawrence H. Goulder
  • Barry Eichengreen

Abstract

A computable general equilibrium model is used to examine effects of removing U.S. tariff and non-tariff barriers to trade. The model differs from traditional disaggregated trade models in its attention to intertemporal decision-making, adjustment dynamics, and international capital mobility. Unilateral elimination of tariffs would reduce the welfare of U.S. households by 0.4 percent. Elimination of quantitative restrictions, in contrast, would increase U.S. welfare by 1.1 percent. The international cross-ownership of capital associated with internationally mobile capital significantly influences the distribution of capital gains and losses from trade liberalization. Disregarding cross-ownership leads to understatement of the domestic welfare losses from tariff removal and overstatement of the domestic welfare gains from eliminating quantitative restrictions.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 25 (1992)
Issue (Month): 2 (May)
Pages: 253-80

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Handle: RePEc:cje:issued:v:25:y:1992:i:2:p:253-80

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References

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  1. Grandmont, Jean-Michel, 1993. "Temporary general equilibrium theory," Handbook of Mathematical Economics, in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 19, pages 879-922 Elsevier.
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  16. Ishii, Naoko & McKibbin, Warwick & Sachs, Jeffrey, 1985. "The economic policy mix, policy cooperation, and protectionism: Some aspects of macroeconomic interdependence among the United States, Japan, and other OECD countries," Journal of Policy Modeling, Elsevier, vol. 7(4), pages 533-572.
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Citations

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Cited by:
  1. Michael A. Kouparitsas, 1998. "Dynamic trade liberalization analysis: steady state, transitional and inter-industry effects," Working Paper Series WP-98-15, Federal Reserve Bank of Chicago.
  2. Warwick J. McKibbin, 1996. "Quantifying APEC Trade Liberalization: A Dynamic Analysis," Departmental Working Papers 1996-01, The Australian National University, Arndt-Corden Department of Economics.
  3. Klepper, Gernot & Lorz, Jens Oliver & Stähler, Frank & Thiele, Rainer & Wiebelt, Manfred, 1993. "Empirische allgemeine Gleichgewichts-Modelle: Struktur und Anwendungsmöglichkeiten," Kiel Working Papers 595, Kiel Institute for the World Economy.
  4. Walmsley, Terrie, 1998. "Long Run Simulations With GTAP: Illustrative Results from APEC Trade Liberalisation," GTAP Technical Papers 312, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  5. Willenbockel, Dirk, 1999. "Dynamic applied general equilibrium trade policy analysis in the presence of foreign asset cross-ownership," Economic Modelling, Elsevier, vol. 16(3), pages 371-388, August.
  6. Keuschnigg, Christian & Kohler, Wilhelm, 1996. "Commercial policy and dynamic adjustment under monopolistic competition," Journal of International Economics, Elsevier, vol. 40(3-4), pages 373-409, May.
  7. Mohamed Ali Marouani, 2009. "Is the End of the MFA a Threat?," Review of Development Economics, Wiley Blackwell, vol. 13(1), pages 99-110, 02.
  8. AKITOBY, Bernardin, 1997. "Rigidité normale, dévaluation et équilibre général intertemporel," Cahiers de recherche 9708, Universite de Montreal, Departement de sciences economiques.
  9. Carlos E. J. M. Zarazaga, 2000. "Measuring the benefits of unilateral trade liberalization; part 2: dynamic models," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q1, pages 29-39.
  10. Mohamed Ali Marouani, 2007. "Is the End of the MFA a threat for the Tunisian Economy?," Working Papers DT/2007/05, DIAL (Développement, Institutions et Mondialisation).
  11. Dissou, Yazid & Mac Leod, Carolyn & Souissi, Mokhtar, 2002. "Compliance costs to the Kyoto Protocol and market structure in Canada: a dynamic general equilibrium analysis," Journal of Policy Modeling, Elsevier, vol. 24(7-8), pages 751-779, November.
  12. 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.

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