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Case Study: Welfare and poverty impacts of trade liberalization: a dynamic CGE microsimulation analysis

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Author Info

  • Selim Raihan

    ()
    (Dept. of Economics, University of Dhaka, Dhaka 1000, Bangladesh;)

Abstract

This case study focuses on the application of a dynamic top-down CGE microsimulation model of the Bangladesh economy. Specifically, this paper examines the macroeconomic, poverty and welfare impacts of complete and unilateral domestic trade liberalization in Bangladesh over the last two decades. Two different poverty lines for rural and urban households are used, which are endogenously determined by the model taking into account the rural and urban Consumer Price Indices (CPIs). The results suggests marked differences between the short and long run impacts of tariff liberalization. In the short run there are possibilities of reduced welfare and increased poverty. However, in the long run, resources are reallocated towards the more efficient and expanding sectors, generating positive outcomes in terms of welfare gains and poverty reduction.

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File URL: http://ima.natsem.canberra.edu.au/IJM/V3_1/IJM_35.pdf
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Bibliographic Info

Article provided by Interational Microsimulation Association in its journal International Journal of Microsimulation.

Volume (Year): 3 (2010)
Issue (Month): 1 ()
Pages: 123-126

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Handle: RePEc:ijm:journl:v:3:y:2010:i:1:p:123-126

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Web page: http://ima.natsem.canberra.edu.au/index.htm

Related research

Keywords: trade liberalization; CPI; top-down; CGE; Bangladesh;

References

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  1. François Bourguignon & Maurizio Bussolo & Luiz A. Pereira da Silva, 2008. "The Impact of Macroeconomic Policies on Poverty and Income Distribution : Macro-Micro Evaluation Techniques and Tools," World Bank Publications, The World Bank, number 6586, August.
  2. Luc Savard, 2003. "Poverty and Income Distribution in a CGE-Household Micro-Simulation Model: Top-Down/Bottom Up Approach," Cahiers de recherche, CIRPEE 0343, CIRPEE.
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Cited by:
  1. Hielke Buddelmeyer & Nicolas Hérault & Guyonne Kalb & Mark van Zijll de Jong, 2012. "Linking a Microsimulation Model to a Dynamic CGE Model: Climate Change Mitigation Policies and Income Distribution in Australia," International Journal of Microsimulation, Interational Microsimulation Association, Interational Microsimulation Association, vol. 5(2), pages 40-58.
  2. Andrew Feltenstein & Luciana Lopes & Janet Porras Mendoza & Sally Wallace, 2013. "“The Impact of Micro-simulation and CGE modeling on Tax Reform and Tax Advice in Developing Countries”: A Survey of Alternative Approaches and an Application to Pakistan," International Center for Public Policy Working Paper Series, at AYSPS, GSU, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University paper1309, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  3. Maheshwar Rao & Robert Tanton & Yogi Vidyattama, 2013. "‘A Systems Approach to Analyse the Impacts of Water Policy Reform in the Murray-Darling Basin: a conceptual and an analytical framework’," NATSEM Working Paper Series, University of Canberra, National Centre for Social and Economic Modelling 13/22, University of Canberra, National Centre for Social and Economic Modelling.

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