Are The Poverty Effects of Trade Policies Invisible?
AbstractWith the advent of the WTO’s Doha Development Agenda, as well as the Millennium Development Goals aiming to reduce poverty by 50 percent by 2015, poverty impacts of trade reforms have attracted increasing attention. This has been particularly true of agricultural trade reform due to the importance of food in the diets of the poor, relatively higher protection in agriculture, as well as the heavy concentration of global poverty in rural areas where agriculture is the main source of income. Yet some in this debate have argued that, given the extreme volatility in agricultural commodity markets, the additional price and poverty impacts due to trade liberalization might well be undetectable. This paper formally tests this “invisibility hypothesis” via stochastic simulation of a computable general equilibrium framework. The hypothesis test is based on the comparison of two sets of price and poverty distributions. The first originates solely from the inherent variability in global staple grains markets, while the second combines the effects of this inherent variability and trade reform. Results indicate that the short-run impacts of trade liberalization on poverty are not distinguishable from market volatility in majority of the fifteen focus countries – suggesting that the poverty impacts of agricultural trade liberalization may indeed be invisible.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 61793.
Date of creation: 2010
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Trade policy reform; agricultural trade; computable general equilibrium; developing countries; poverty headcount; volatility; stochastic simulation; non-parametric hypothesis testing; Financial Economics; Risk and Uncertainty; C68; F17; I32; Q17; R20;
Other versions of this item:
- Monika Verma & Thomas W. Hertel & Ernesto Valenzuela, 2011. "Are The Poverty Effects of Trade Policies Invisible?," World Bank Economic Review, World Bank Group, vol. 25(2), pages 190-211, May.
- Monika Verma & Thomas Hertel & Ernesto Valenzuela, 2011. "Are the Poverty Effects of Trade Policies Invisible?," School of Economics Working Papers 2011-14, University of Adelaide, School of Economics.
- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
- I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
- R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
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