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Global Trade Models and Economic Policy Analyses: Relevance, Risks and Repercussions for Africa

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  • Ben Hammouda, Hakim
  • Osakwe, Patrick N.

Abstract

Computable general equilibrium (CGE) models are widely used for trade policy analyses and recommendations. Simulation results from these models have also been used as a basis for offering advice to African countries on what positions to take in multilateral trade negotiations. There is however increasing discomfort with the use of these models for policy recommendations, especially in Africa. In this paper we compare the results of several CGE studies that examined the impact of potential Doha Round reforms on Africa and demonstrate that the results differ drastically both in terms of magnitude and direction. Part of the discrepancies in results can be explained by differences in database, model structure, and choice of parameters. Others are, however, difficult to explain because several studies either do not report key assumptions made or do not provide a clear description of how their framework differs from those in the literature. We also show that the modelling approach and the database used in most CGE studies do not take account of key features of African economies that have serious implications for the impact of trade reforms on Africa. Finally, we outline potential consequences of the misuse of CGE models for policy evaluation and suggest pitfalls to avoid if CGE model results are to be taken seriously by policy makers in Africa.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1851.

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Date of creation: Dec 2006
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Handle: RePEc:pra:mprapa:1851

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Keywords: Trade Reforms; CGE Models; Doha Round; Africa;

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  1. Mohamed Hedi Bchir & Yvan Decreux & Jean-Louis Guerin & Sebastien Jean, 2002. "MIRAGE, un modele d'equilibre general calculable pour l'evaluation des politiques commerciales," Economie Internationale, CEPII research center, issue 89-90, pages 109-153.
  2. Jean-Christophe Bureau & Antoine Bouet, Yvan Decreux, Sébastien Jean, 2005. "Multilateral agricultural trade liberalization: The contrasting fortunes of developing countries in the Doha Round," The Institute for International Integration Studies Discussion Paper Series iiisdp060, IIIS.
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Cited by:
  1. Cernat, Lucian & Onguglo, Bonapas, 2008. "RTAs and WTO Compatibility: Catch Me If You Can? The Case of EPA Negotiations," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 489-517.
  2. Vaqar Ahmed & Cathal O'Donoghue, 2010. "External Shocks in a Small Open Economy: A CGE - Microsimulation Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(1), pages 45-90, Jan-Jun.

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