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Analyzing Poverty Impact of Trade Liberalization Policies in CGE Models: Theory and Some Policy Experiments in Agricultural and Non-agricultural Sectors in South Asia

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Khan, haider

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Abstract

The paper uses a dualistic, compact and “generic” (macroeconomic) computable general equilibrium (CGE) model specially constructed for the purpose of investigating the implications of trade liberalization for poverty reduction in South Asia. The model is a stylized representation of economies with large populations including large numbers of both urban and rural poor as in India, Pakistan or Bangladesh. The current “generic” model uses CES production functions and Harris-Todaro type migration model together with representative data to generate economy wide results. It is found that a dualistic production structure with sufficient details on the labor markets and household side can capture some of the effects of trade liberalization on poverty reduction. The model’s general equilibrium results suggest that trade liberalization can complement other specific policy interventions for poverty reduction.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7609.

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Date of creation: Mar 2008
Date of revision: Mar 2008
Handle: RePEc:pra:mprapa:7609

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Related research
Keywords: Poverty; Trade Liberalization; Dualism; CGE model; Agriculture Informal; Urban Informal sector.;

Find related papers by JEL classification:
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models
A10 - General Economics and Teaching - - General Economics - - - General
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists

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