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Intertemporal General Equilibrium Effects of a Regional Trade Agreement on Third-Country

Author

Listed:
  • Diao , Xinshen

    (International Food Policy Research Institute (IFPRI) Consultative Group on International Agricultural Research (CGIAR))

  • Somwaru , Agapi

    (USDA Economic Research Service (ERS))

Abstract

A multi-region and multi-sector intertemporal general equilibrium model is constructed to study MERCOSUR regional trade agreement effects on its member countries as well as on a non-member country, the United States. By taking into account both transitional and steady state adjustments, simulation results show that tariff reductions initiated by MERCOSUR have positive effects on U.S. production, trade, and investment, but are quite small as U.S. economy is much larger than that of MERCOSUR. lf tariffs are eliminated bilaterally between U.S. and MERCOSUR, the gains from trade liberalization are much greater in terms of intertemporal social welfare, domestic investment, international trade and growth. JEL Classification: O41, F11.

Suggested Citation

  • Diao , Xinshen & Somwaru , Agapi, 1997. "Intertemporal General Equilibrium Effects of a Regional Trade Agreement on Third-Country," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 50(3), pages 375-404.
    • Handle: RePEc:ris:ecoint:0329
    as

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    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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