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Trade Liberalisation and Poverty in Nepal: A Computable General Equilibrium Micro Simulation Analysis

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  • John Cockburn

Abstract

Concern is growing regarding the poverty impacts of trade liberalization. The strong general equilibrium effects of trade liberalization can only be properly analysed in a CGE model. However, the aggregate nature of CGE models is not suited to detailed poverty analysis. We bridge this gap by constructing a CGE model that explicitly models all households from a nationally representative household survey. We find complex income and consumption effects that would be missed in standard CGE models. Urban poverty falls and rural poverty increases as initial tariffs were highest for agriculture. Impacts increase with income level, resulting in rising income inequality.

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Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2002-11.

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Date of creation: 2002
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Handle: RePEc:csa:wpaper:2002-11

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Keywords: computable general equilibrium modelling; international trade; poverty; Nepal.;

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  1. Decaluwé, Bernard & Dumont, Jean-Christophe & Savard, Luc, 2000. "Measuring Poverty and Inequality in a Computable General Equilibrium Model," Cahiers de recherche 9926, Université Laval - Département d'économique.
  2. Marcel Fafchamps & Forhad Shilpi, 2003. "The spatial division of labour in Nepal," Journal of Development Studies, Taylor & Francis Journals, vol. 39(6), pages 23-66.
  3. Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Cahiers de recherche 9909, Université Laval - Département d'économique.
  4. Nguyen Chan & Madanmohan Ghosh & John Whalley, 1999. "Evaluating Tax Reform in Vietnam Using General Equilibrium Methods," UWO Department of Economics Working Papers 9906, University of Western Ontario, Department of Economics.
  5. Piggott,John & Whalley,John, 2009. "UK Tax Policy and Applied General Equilibrium Analysis," Cambridge Books, Cambridge University Press, number 9780521104593, April.
  6. Cogneau, Denis & Robilliard, Anne-Sophie, 2000. "Growth, distribution and poverty in Madagascar," TMD discussion papers 61, International Food Policy Research Institute (IFPRI).
  7. de Janvry, Alain & Sadoulet, Elisabeth & Fargeix, Andre, 1991. "Politically feasible and equitable adjustment: Some alternatives for ecuador," World Development, Elsevier, vol. 19(11), pages 1577-1594, November.
  8. Bourguignon, Francois & Fournier, M & Gurgand, M, 2001. "Fast Development with a Stable Income Distribution: Taiwan, 1979-94," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(2), pages 139-63, June.
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