Consequences of price volatility in evaluating the benefits of liberalisation
AbstractMany computable general equilibrium models have been set up recently, in order to assess the benefits of trade liberalisation, especially in agriculture. Although figures magnitudes differ from one model to another, they cannot reach any other conclusion than positive benefits. On the other hand, historical experience shows that liberalisation, far from being a new idea, has been tried at several occasions during the two last centuries, repeatedly ending in crisis, and hasty return to various forms of protection. A possible explanation could be in the comparative static approach of most liberalisation proponents, and their neglect of dynamic aspects. Especially, because risk is necessarily tied with unfulfilled expectations, it should play a decisive role in modelling. A new model is developed along this line, showing the possibility of a chaotic price regime, which would prevent full liberalisation to be feasible.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 4467.
Date of creation: 01 May 2006
Date of revision:
globalisation; risk ; volatility ; modelling ; trade ; agriculture ; Doha ; WTO;
Find related papers by JEL classification:
- F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
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