IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/332034.html
   My bibliography  Save this paper

Households heterogeneity in a global CGE model: an illustration with the MIRAGE poverty module

Author

Listed:
  • Bouët, Antoine
  • Estrades, Carmen
  • Laborde, David

Abstract

The objective of this paper is to develop a version of the MIRAGE model of the world economy which includes households heterogeneity in order to studying the impact of trade liberalization on real income and welfare at the household level. In five developing countries, the model disaggregates the representative household into up to 80 households by country, characterized by exogenous criteria like geographic place of residence, qualification and gender of the household’s head, (private vs. public or agriculture vs. industry vs. services) sector of activity,... The sources of income and consumption structure reflect disaggregated statistical information coming from households’ surveys. The new model better captures the behavior of the public agent in terms of revenues collected and in terms of expenditures. This new version of MIRAGE allows studying the impact of various policy shocks and identifying which households are expected to win, which households are expected to lose and why, while taking into account the reaction of households to these shocks in an integrated and consistent framework. We illustrate the development of this poverty module of the MIRAGE model by studying the impact of full trade liberalization on these households. This study tends to conclude that: (i) while the impact of full trade liberalization may be small at the macroeconomic level, the effect on households’ real income may be quite substantial at the household level with a great heterogeneity in terms of results; (ii) the major channel of transmission of trade liberalization on households’ real income is productive factors’ remuneration while the impact through consumption prices of commodities is limited; (iii) various domestic policies simultaneously implemented to trade liberalization like modification of public transfers to households or changes in income taxation may drastically change the picture and offer compensation for negative effects of this shock or amplify direct impact of full trade liberalization.

Suggested Citation

  • Bouët, Antoine & Estrades, Carmen & Laborde, David, 2011. "Households heterogeneity in a global CGE model: an illustration with the MIRAGE poverty module," Conference papers 332034, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332034
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/332034/files/7009.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. repec:oup:ecpoli:v:27:y:2012:i:72:p:567-602 is not listed on IDEAS
    2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    3. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-177, March.
    4. Bruce A. Blonigen & Anson Soderbery, 2019. "Measuring the Benefits of Foreign Product Variety with an Accurate Variety Set," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 15, pages 501-538, World Scientific Publishing Co. Pte. Ltd..
    5. Romer, Paul, 1994. "New goods, old theory, and the welfare costs of trade restrictions," Journal of Development Economics, Elsevier, vol. 43(1), pages 5-38, February.
    6. Robert Feenstra & Hiau Looi Kee, 2004. "On the Measurement of Product Variety in Trade," American Economic Review, American Economic Association, vol. 94(2), pages 145-149, May.
    7. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    8. Andrew Bernard & J Bradford Jensen & Stephen Redding & Peter Schott, 2009. "The Margins of U.S. Trade (Long Version)," Working Papers 09-18, Center for Economic Studies, U.S. Census Bureau.
    9. Andrei A. Levchenko & Jing Zhang, 2012. "Comparative advantage and the welfare impact of European integration [General equilibrium analysis of the Eaton–Kortum model of international trade]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 27(72), pages 567-602.
    10. Christian Broda & David W. Weinstein, 2004. "Variety Growth and World Welfare," American Economic Review, American Economic Association, vol. 94(2), pages 139-144, May.
    11. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2009. "The Margins of US Trade," American Economic Review, American Economic Association, vol. 99(2), pages 487-493, May.
    12. Costas Arkolakis & Svetlana Demidova & Peter J. Klenow & Andres Rodriguez-Clare, 2008. "Endogenous Variety and the Gains from Trade," American Economic Review, American Economic Association, vol. 98(2), pages 444-450, May.
    13. D’Artis Kancs, 2010. "Structural Estimation of Variety Gains from Trade Integration in Asia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 270-288, September.
    14. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    15. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
    16. Soderbery, Anson, 2010. "Investigating the asymptotic properties of import elasticity estimates," Economics Letters, Elsevier, vol. 109(2), pages 57-62, November.
    17. Sato, Kazuo, 1976. "The Ideal Log-Change Index Number," The Review of Economics and Statistics, MIT Press, vol. 58(2), pages 223-228, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kancs, d'Artis & Persyn, Damiaan, 2019. "Welfare Gains from the Variety Growth," Working Papers 2019-01, Joint Research Centre, European Commission.
    2. Lukas Mohler & Michael Seitz, 2012. "The gains from variety in the European Union," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(3), pages 475-500, September.
    3. Lukas Mohler, 2011. "Variety Gains from Trade in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(I), pages 45-70, March.
    4. Konstantins Benkovskis & Julia Wörz, 2014. "How does taste and quality impact on import prices?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(4), pages 665-691, November.
    5. Lewrick, Ulf & Mohler, Lukas & Weder, Rolf, 2011. "International Trade in Variety and Domestic Production," Working papers 2011/03, Faculty of Business and Economics - University of Basel.
    6. Konstantins Benkovskis & Ramune Rimgailaite, 2011. "The quality and variety of exports from the new EU member states," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(4), pages 723-747, October.
    7. Colantone, Italo & Crinò, Rosario, 2014. "New imported inputs, new domestic products," Journal of International Economics, Elsevier, vol. 92(1), pages 147-165.
    8. Mohler, Lukas, 2009. "Globalization and the gains from variety: size and openness of countries and the extensive margin," MPRA Paper 17592, University Library of Munich, Germany.
    9. Lukas Mohler, 2014. "Variety Gains and the Extensive Margin of Trade," International Economic Journal, Taylor & Francis Journals, vol. 28(4), pages 543-558, December.
    10. Konstantins Benkovskis & Julia Wörz, 2011. "How Does Quality Impact on Import Prices?," Working Papers 175, Oesterreichische Nationalbank (Austrian Central Bank).
    11. Lukas Mohler, 2009. "Globalization and the Gains from Variety: The Case of a Small Open Economy," FIW Working Paper series 031, FIW.
    12. Benkovskis, Konstantins & Wörz, Julia, 2018. "What drives the market share changes? Price versus non-price factors," Structural Change and Economic Dynamics, Elsevier, vol. 45(C), pages 9-29.
    13. Ardelean, Adina & Lugovskyy, Volodymyr, 2010. "Domestic productivity and variety gains from trade," Journal of International Economics, Elsevier, vol. 80(2), pages 280-291, March.
    14. Victor Rivas, 2012. "Structural Estimation of Variety Gains from Trade Integration in a Heterogeneous Firms Framework," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 55(2), pages 78-93.
    15. Kichun Kang & Byung Chul Ahn, 2010. "China's Penetration of the Korean Market: Stylized Facts and Welfare Effect," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(5), pages 54-71, September.
    16. Broda, Christian & Greenfield, Joshua & Weinstein, David E., 2017. "From groundnuts to globalization: A structural estimate of trade and growth," Research in Economics, Elsevier, vol. 71(4), pages 759-783.
    17. Benkovskis, Konstantins & Wörz, Julia, 2018. "What drives the market share changes? Price versus non-price factors," Structural Change and Economic Dynamics, Elsevier, vol. 45(C), pages 9-29.
    18. Tohmas Karlsson, 2011. "Imports, Product Variety and the Extensive Margin: Some Stylized Facts," EcoMod2011 3003, EcoMod.
    19. Kang, Kichun, 2009. "The export price index with the effect of variety and an empirical analysis," Economic Modelling, Elsevier, vol. 26(2), pages 385-391, March.
    20. Corsetti, Giancarlo & Martin, Philippe & Pesenti, Paolo, 2007. "Productivity, terms of trade and the `home market effect'," Journal of International Economics, Elsevier, vol. 73(1), pages 99-127, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:332034. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.