General Equilibrium Model of Agricultural Trade: An Intertemporal Optimizing Approach with Implications for Tariffication, A
AbstractThe paper develops a theoretical model such that the performance of the macroeconomy is consistent with optimizing the behavior of rational individuals. It demonstrates that, in principle, it is possible to convert existing trade barriers into tariffs by using the price-gap method. In practice, however, tariff and nontariff barriers are not equivalent; replacing policies that result in a price gap of x percent with a tariff of x percent will generally yield different trade volumes. U.S. farm exports will initially decline in anticipation of a reduction in foreign trade barriers. Current demand for U.S. agricultural exports is likely to decline as rational agents in the foreign agricultural sector reduce current storage and demand increase current production in anticipation of a decline in their domestic prices. U.S. export performance will improve once trade restrictions are actually reduced.
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Bibliographic InfoPaper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 90-gatt9.
Date of creation: Dec 1991
Date of revision:
Other versions of this item:
- Walter Enders, 1991. "General Equilibrium Model of Agricultural Trade: An Intertemporal Optimizing Approach with Implications for Tariffication, A," Food and Agricultural Policy Research Institute (FAPRI) Publications 90-gatt9, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
- Enders, Walter, 1991. "General Equilibrium Model of Agricultural Trade: An Intertemporal Optimizing Approach with Implications for Tariffication," Staff General Research Papers 400, Iowa State University, Department of Economics.
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