Effects of Trade Liberalization on Domestic Prices: Some Evidence from Tunisian Manufacturing
AbstractThis paper presents estimates of the competitive effects of trade liberalization on domestic pricing behaviour of Tunisian manufacturing industries. The theoretical framework is based on a dynamic flexible adjustment model of price determination in a small open economy. It investigates the process of adjustment in price level toward a desired level. The adjustment process is both industrial and time-specific. The empirical results show that, in the long run, domestic price responds greatly to import penetration, followed by demand pressure. There was a negative effect from import competition on domestic price. Trade policy is a viable policy option to promote competitiveness.
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Bibliographic InfoPaper provided by The Ratio Institute in its series Ratio Working Papers with number 96.
Length: 31 pages
Date of creation: 25 Apr 2006
Date of revision:
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dynamic model; domestic price; trade liberalization; panel data; speed of adjustment; Tunisia;
Other versions of this item:
- Ali Saggay & Almas Heshmati & Mohamed Dhif, 2007. "Effects of trade liberalization on domestic prices: Some evidence from Tunisian manufacturing," International Review of Economics, Springer, vol. 54(1), pages 148-175, March.
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
This paper has been announced in the following NEP Reports:
- NEP-AFR-2006-04-29 (Africa)
- NEP-ALL-2006-04-29 (All new papers)
- NEP-INT-2006-04-29 (International Trade)
- NEP-MAC-2006-04-29 (Macroeconomics)
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