Trade adjustment policies and income distribution in three archetype developing economies
This paper explores quantitatively the macroeconomic and distributional impacts on non-oil producing, semi-industrial developing countries of external shocks originating in the world economy—in particular, rising costs of imports and shrinking export markets. The empirical analysis is done with a computable general equilibrium (CGE) model. The effects of the same external shock are modelled for three different archetype economies: a primary exporter, a manufacturing exporter, and a closed economy. Three different policy-adjustment regimes are considered: devaluation, premium rationing of imports (import licenses), and premium rationing in an environment with a fixed real wage for unskilled labor. By making simple assumptions about the way socioeconomic groups operate to influence decision-making, the paper also examines how the struggle between the gainers and losers is likely to affect the policy regime to be chosen.
(This abstract was borrowed from another version of this item.)