Welfare Impact of Trade Liberalization
AbstractThis paper constructs a static Applied General Equilibrium Model and analyzes the distributional impact of trade reforms. To calibrate our model, we work with the Household Expenditure Survey to disaggregate household groups by income, age, and skill intensity, and the Input-Output table to construct a Social Accounting Matrix. Our benchmark simulation looks at Slovenia joining the European Union. We then compare with two alternative scenarios: a free trade agreement between Slovenia and the EU, and an alternative fiscal arrangement of distributing tariff revenues under the EU. While trade reforms lead to falling prices in the import sector, rising production in the export sector, and improvement in aggregate welfare, the distributional impacts across household groups vary in its degree.
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Bibliographic InfoPaper provided by School of Economics, The University of New South Wales in its series Discussion Papers with number 2008-20.
Length: 33 pages
Date of creation: Oct 2008
Date of revision:
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Web page: http://www.economics.unsw.edu.au/
More information through EDIRC
Trade Liberalization; Free Trade Agreement; Customs Union; Social Accounting Matrix; Household welfare;
Other versions of this item:
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F15 - International Economics - - Trade - - - Economic Integration
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- (Stanley) Cho, Sang-Wook & P. Díaz, Julián, 2008.
"Trade Liberalization in Latin America and Eastern Europe: the Cases of Ecuador and Slovenia,"
Journal of Economic Integration,
Center for Economic Integration, Sejong University, vol. 23, pages 1002-1045.
- Sang-Wook Stanley Cho & Julian P. Diaz, 2007. "Trade Liberalization in Latin America and Eastern Europe: The Cases of Ecuador and Slovenia," Discussion Papers 2007-25, School of Economics, The University of New South Wales.
- Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-51, September.
- Timothy J. Kehoe, 1996. "Social accounting matrices and applied general equilibrium models," Working Papers 563, Federal Reserve Bank of Minneapolis.
- Porto, Guido G., 2006.
"Using survey data to assess the distributional effects of trade policy,"
Journal of International Economics,
Elsevier, vol. 70(1), pages 140-160, September.
- Guido G. Porto, 2003. "Using survey data to assess the distributional effects of trade policy," Policy Research Working Paper Series 3137, The World Bank.
- Cho, Sang-Wook (Stanley) & Díaz, Julián P., 2013. "Trade integration and the skill premium: Evidence from a transition economy," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 601-620.
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