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General Equilibrium Analysis of Croatia’s Accession to the World Trade Organization

Author

Listed:
  • Jasminka Šohinger
  • Davor Galinec

    (The Croatian National Bank, Croatia)

  • Glenn W. Harrison

Abstract

We consider the effects on Croatia of several important trade policy reforms using a quantitative, multi-regional, general equilibrium framework. A complete trade agreement with the European Union requires that some intermediate reforms occur, such as Croatia joining the World Trade Organization and liberalizing its trade policies. We evaluate the current trade regime of Croatia to assess what impacts those reforms will have. We then employ a quantitative simulation model to measure the effects on welfare of the intermediate reforms as well as the complete reform. We find that Croatia may suffer some short-term reductions in welfare as it starts out on the path to liberalization, but that there are welfare gains from complete liberalization. It is therefore important that the initial policy reforms be seen as one step along a path that will eventually provide demonstrable welfare gains, rather than as an end in themselves. Our approach is also designed to provide a formal simulation model that can be used to re-examine these issues as the reforms proceed, as they are modified, and as better data becomes available.

Suggested Citation

  • Jasminka Šohinger & Davor Galinec & Glenn W. Harrison, 2001. "General Equilibrium Analysis of Croatia’s Accession to the World Trade Organization," Working Papers 6, The Croatian National Bank, Croatia.
    • Handle: RePEc:hnb:wpaper:6
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    File URL: http://www.hnb.hr/repec/hnb/wpaper/pdf/w-006.pdf
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    References listed on IDEAS

    as
    1. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    2. International Monetary Fund, 1998. "Republic of Croatia: Selected Issues and Statistical Appendix," IMF Staff Country Reports 1998/090, International Monetary Fund.
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    Cited by:

    1. Anna Kolesnichenko & Maryla Maliszewska, 2004. "General Equilibrium Analysis of Albania's Integration with the EU and South Eastern Europe," CASE Network Studies and Analyses 0283, CASE-Center for Social and Economic Research.
    2. Milan Deskar-Škrbiæ, 2018. "Dynamic effects of fiscal policy in Croatia: confronting New-Keynesian SOE theory with empirics," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(1), pages 83-102.

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    More about this item

    Keywords

    general equilibrium; trade agreement; trade policy; trade liberalization; welfare gains;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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