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Morocco's free trade agreement with the EU: A quantitative assessment

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Listed:
  • Rutherford, Thomas F.
  • Rutstrom, E. Elisabet
  • Tarr, David

Abstract

Using an applied general equilibrium model, we find that the EU–Morocco free trade area (FTA) will increase Moroccan welfare by about 1.5% of its GDP, showing that trade diversion is not dominant. The gains increase to about 2.5% of GDP if Morocco adds trade liberalization with the rest of the world while adjustment costs are only slightly higher, partly reflecting the absence of trade diversion with global liberalization. We show what are the key modeling assumptions and parameter choices that affect the estimates in models of this type, employing systematic sensitivity analysis as well as graphical exposition.
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Suggested Citation

  • Rutherford, Thomas F. & Rutstrom, E. Elisabet & Tarr, David, 1997. "Morocco's free trade agreement with the EU: A quantitative assessment," Economic Modelling, Elsevier, vol. 14(2), pages 237-269, April.
    • Handle: RePEc:eee:ecmode:v:14:y:1997:i:2:p:237-269
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    References listed on IDEAS

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    1. Harrison, Glenn W & Vinod, H D, 1992. "The Sensitivity Analysis of Applied General Equilibrium Models: Completely Randomized Factorial Sampling Designs," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 357-362, May.
    2. Harberger, Arnold C, 1971. "Three Basic Postulates for Applied Welfare Economics: An Interpretive Essay," Journal of Economic Literature, American Economic Association, vol. 9(3), pages 785-797, September.
    3. Rutherford, Thomas F. & Rutstrom, E.E. & Tarr, David, 1993. "Morocco's free trade agreement with the European community : a quantitative assessment," Policy Research Working Paper Series 1173, The World Bank.
    4. Burns, Michael E, 1973. "A Note on the Concept and Measure of Consumer's Surplus," American Economic Review, American Economic Association, vol. 63(3), pages 335-344, June.
    5. Harrison, Glenn W & Rutherford, Thomas F & Wooton, Ian, 1989. "The Economic Impact of the European Community," American Economic Review, American Economic Association, vol. 79(2), pages 288-294, May.
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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