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On Trade Policy Reform and the Missing Revenue: an Application to Mozambique

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Author Info
Channing Arndt (Purdue University)
Finn Tarp (Institute of Economics, University of Copenhagen)

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Abstract

In many developing countries, large discrepancies exist between revenues implied by published tariff rates multiplied by estimated import volumes and actual receipts. We develop a stylized trade model where average and marginal tariff rates diverge and incorporate insights from this model into a computable general equilibrium model of Mozambique to study the implications of trade policy reform. Model simulations indicate that lowering tariff rates and reducing duty free importation in a manner that maintains official revenue benefits nearly everyone with the main exception being those, who benefited from duty free imports in the base.

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Publisher Info
Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 04-19.

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Length: 26 pages
Date of creation: Oct 2004
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Handle: RePEc:kud:kuiedp:0419

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Related research
Keywords: trade policy; public revenue; Mozambique;

Find related papers by JEL classification:
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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  1. L Alan Winters, 2004. "Trade Liberalisation and Economic Performance: An Overview," Economic Journal, Royal Economic Society, vol. 114(493), pages F4-F21, 02. [Downloadable!] (restricted)
  2. Pitt, Mark M., 1981. "Smuggling and price disparity," Journal of International Economics, Elsevier, vol. 11(4), pages 447-458, November. [Downloadable!] (restricted)
  3. Bliss, Christopher, 1992. "The Design of Fiscal Reforms in Revenue-Constrained Developing Countries," Economic Journal, Royal Economic Society, vol. 102(413), pages 940-51, July. [Downloadable!] (restricted)
  4. McLaren, John, 1998. "Black Markets and Optimal Evadable Taxation," Economic Journal, Royal Economic Society, vol. 108(448), pages 665-79, May. [Downloadable!] (restricted)
  5. Mc Laren, J, 1996. "Corruption, Black Markets, and the Fiscal Problem in LDC's : Some Recent Findings," Papers 763, Yale - Economic Growth Center.
  6. John McLaren, 1996. "Corruption, Black Markets, and the Fiscal Problem in LDCs: Some Recent Findings," Eastern Economic Journal, Eastern Economic Association, vol. 22(4), pages 491-502, Fall. [Downloadable!]
  7. Henning Tarp Jensen & Finn Tarp, 2002. "CGE Modelling and Trade Policy: Reassessing The Agricultural Bias," Journal of Agricultural Economics, Blackwell Publishing, vol. 53(2), pages 383-405. [Downloadable!] (restricted)
  8. Burgess, Robin & Stern, Nicholas, 1993. "Taxation and Development," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 762-830, June. [Downloadable!] (restricted)
  9. Pritchett, Lant & Sethi, Geeta, 1994. "Tariff Rates, Tariff Revenue, and Tariff Reform: Some New Facts," World Bank Economic Review, Oxford University Press, vol. 8(1), pages 1-16, January.
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  10. Fontana, Marzia & Wood, Adrian, 2000. "Modeling the Effects of Trade on Women, at Work and at Home," World Development, Elsevier, vol. 28(7), pages 1173-1190, July. [Downloadable!] (restricted)
  11. Devaragan, Shantayanan & Lewis, Jeffrey D. & Robinson, Sherman, 1990. "Policy lessons from trade-focused, two-sector models," Journal of Policy Modeling, Elsevier, vol. 12(4), pages 625-657. [Downloadable!] (restricted)
  12. Arndt, Channing & Robinson, Sherman & Tarp, Finn, 2002. "Parameter estimation for a computable general equilibrium model: a maximum entropy approach," Economic Modelling, Elsevier, vol. 19(3), pages 375-398, May. [Downloadable!] (restricted)
  13. Tarp, Finn & Arndt, Channing & Jensen, Henning Tarp & Robinson, Sherman & Heltberg, Rasmus, 2002. "Facing the development challenge in Mozambique: an economywide perspective," Research reports 126, International Food Policy Research Institute (IFPRI). [Downloadable!]
  14. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June. [Downloadable!] (restricted)
  15. Elbehri, Aziz & Ken Pearson, 2000. "Implementing Bilateral Tariff Rate Quotas in GTAP using GEMPACK," GTAP Technical Papers 475, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University. [Downloadable!]
  16. McLaren, J, 1996. "Corruption, Black Markets, and the Fiscal Problem in LDC's : Some Recent Finding," Discussion Papers 1996_27, Columbia University, Department of Economics.
  17. Arndt, Channing & Tarp, Finn, 2000. "Agricultural Technology, Risk, and Gender: A CGE Analysis of Mozambique," World Development, Elsevier, vol. 28(7), pages 1307-1326, July. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Arndt, Channing, 2005. "The Doha Trade Round and Mozambique," Policy Research Working Paper Series 3717, The World Bank. [Downloadable!]
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