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Trade policy and Spanish specialization, 1978-93

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  • Maria-Jesus Asensio
  • Eva Pardos

Abstract

This article uses a simplified general equilibrium model to analyse the short and long run incidence of trade policy in Spain between 1978 and 1993. The incidence model is usually specified in an inter-industry framework, with increasing tariffs and either increasing or non-existent export subsidies. However, in this paper it is applied in a period of rapid liberalisation and with an intra-industry pattern of trade. The results, based on seasonal integration and cointegration techniques, show that, in the long run, the prices of exportables relative to non-tradables followed the fall in prices of import-competing goods. Hence, the effect of the liberalization process that took place in Spain during this period was precisely the intended one - that is to say, the enhancement of the competitiveness of the tradable sector as a whole. The slow reaction on the part of suppliers in shifting production from importables to exportables resulted in a certain gap between relative prices of tradables only in the short-run. In the end, the effect of trade policy was to create incentives for the reallocation of resources to the production of non-tradables.

Suggested Citation

  • Maria-Jesus Asensio & Eva Pardos, 2001. "Trade policy and Spanish specialization, 1978-93," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 11(2), pages 163-187.
    • Handle: RePEc:taf:jitecd:v:11:y:2001:i:2:p:163-187
    DOI: 10.1080/09638190010110730
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    References listed on IDEAS

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    1. Bautista, Romeo M., 1987. "Production incentives in Philippine agriculture: effects of trade and exchange rate policies," Research reports 59, International Food Policy Research Institute (IFPRI).
    2. Christopher Clague & David Greenaway, 1994. "Incidence Theory, Specific Factors and the Augmented Heckscher‐Ohlin Model," The Economic Record, The Economic Society of Australia, vol. 70(208), pages 36-43, March.
    3. Ana Buisán & Esther Gordo, 1997. "El sector exterior en España," Estudios Económicos, Banco de España, number 60.
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    Cited by:

    1. Clements, Kenneth W. & Fry, Renée, 2008. "Commodity currencies and currency commodities," Resources Policy, Elsevier, vol. 33(2), pages 55-73, June.

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