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The impact of trade liberalisation on poverty and inequality: Evidence from CGE models

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  • Anderson, Edward

Abstract

In this paper we carry out a systematic review of the evidence from CGE models regarding the effect of trade liberalisation on income inequality and poverty in developing countries. The evidence suggests quite strongly that trade liberalisation tends to reduce poverty, but is more likely to increase inequality than reduce it; however, the predicted effects are relatively small. Variation in the size and direction of effects can be explained by the choice of outcome measure, the fiscal response to liberalisation, the type of CGE model, and certain country characteristics – but not the method used to link the CGE model to the distribution of income.

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  • Anderson, Edward, 2020. "The impact of trade liberalisation on poverty and inequality: Evidence from CGE models," Journal of Policy Modeling, Elsevier, vol. 42(6), pages 1208-1227.
    • Handle: RePEc:eee:jpolmo:v:42:y:2020:i:6:p:1208-1227
    DOI: 10.1016/j.jpolmod.2020.05.006
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    Cited by:

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    2. Tobias Mueller & Steven Gronau, 2023. "Fostering Macroeconomic Research on Hydrogen-Powered Aviation: A Systematic Literature Review on General Equilibrium Models," Energies, MDPI, vol. 16(3), pages 1-33, February.
    3. Khan, Muhammad Aamir & Walmsley, Terrie & Mukhopadhyay, Kakali, 2021. "Trade liberalization and income inequality: The case for Pakistan," Journal of Asian Economics, Elsevier, vol. 74(C).
    4. Ponce, Pablo & Yunga, Fernando & Larrea-Silva, Jhohana & Aguirre, Nikolay, 2023. "Spatial determinants of income inequality at the global level: The role of natural resources," Resources Policy, Elsevier, vol. 84(C).
    5. Hauwah K. K. Abdulkareem & Sodiq Olaiwola Jimoh & Ebenezer Olubiyi, 2023. "Trade–peace conundrum in Africa: The moderating effects of poverty and inequality," African Development Review, African Development Bank, vol. 35(4), pages 323-335, December.
    6. Nugroho, Anda & Widyastutik, & Irawan, Tony & Amaliah, Syarifah, 2021. "Does the US–China trade war increase poverty in a developing country? A dynamic general equilibrium analysis for Indonesia," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 279-290.
    7. Ioanna Konstantakopoulou, 2020. "Further Evidence on Import Demand Function and Income Inequality," Economies, MDPI, vol. 8(4), pages 1-12, October.

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    More about this item

    Keywords

    Trade liberalisation; CGE models; Poverty; Inequality;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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