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The impact of tariff reduction on Bangladesh economy: a computable general equilibrium assessment

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  • Hoque, Serajul

Abstract

This paper explores the effects of tariff reduction on macroeconomic indicators and sectoral output in Bangladesh using a computable general equilibrium approach. The simulation results indicate that a reduction in all tariffs expands gross domestic product and generates employment, which suggests that tariff cuts have a short-run stimulatory effect on economic growth. The industries that experience the greatest positive effects on their output and employment are export-oriented industries. There are also positive effects on the suppliers to these industries. Lightly-protected industries that rely heavily on imported intermediate inputs exhibit robust expansion, benefiting from a cost reduction as a result of the removal of protection. However, highly-protected, import-competing industries suffer a contraction in output and employment as they face increased competition from imports due to the liberalisation of trade.

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File URL: http://mpra.ub.uni-muenchen.de/16246/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16246.

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Date of creation: May 2005
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Handle: RePEc:pra:mprapa:16246

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Related research

Keywords: Trade liberalisation; computable general equilibrium model; Bangladesh;

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  1. Dollar, David & Kraay, Aart, 2001. "Trade, growth, and poverty," Policy Research Working Paper Series 2615, The World Bank.
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Cited by:
  1. Mukhopadhyay, Ujjaini & Chaudhuri, Sarbajit, 2011. "Economic liberalization, gender wage inequality and welfare – a theoretical analysis," MPRA Paper 32954, University Library of Munich, Germany.

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