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On the Effects of Trade Policy Reform: The Case of Jordan

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  • Ole Risager
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    Abstract

    Until 1989 the economic policy strategy of Jordan was inward looking with emphasis on import substitution facilitated by a high tariff wall. Since then, the strategy has been changed in the direction of a more outward looking strategy characterized by attempts to stimulate exports, by cuts in import tariffs and removal of several import quotas, and by reductions in the fiscal deficit. The purpose of this paper is to analyse how a further liberalization of the trade regime will affect the economy in a medium term perspective. The main focus is on the development of key macro variables like production, employment, the balance of payments and the government budget following a reduction in import tariffs. Throughout the paper it is assumed that the tariff liberalization is permanent and fully credible. If the policy lacks credibility, the effects may be quite different, see Wijnbergen (1992) and Calvo and Mendoza (1994).

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    Bibliographic Info

    Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 95-16.

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    Handle: RePEc:kud:epruwp:95-16

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