Case Study: Welfare and poverty impacts of trade liberalization: a dynamic CGE microsimulation analysis
This case study focuses on the application of a dynamic top-down CGE microsimulation model of the Bangladesh economy. Specifically, this paper examines the macroeconomic, poverty and welfare impacts of complete and unilateral domestic trade liberalization in Bangladesh over the last two decades. Two different poverty lines for rural and urban households are used, which are endogenously determined by the model taking into account the rural and urban Consumer Price Indices (CPIs). The results suggests marked differences between the short and long run impacts of tariff liberalization. In the short run there are possibilities of reduced welfare and increased poverty. However, in the long run, resources are reallocated towards the more efficient and expanding sectors, generating positive outcomes in terms of welfare gains and poverty reduction.
Volume (Year): 3 (2010)
Issue (Month): 1 ()
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- François Bourguignon & Maurizio Bussolo & Luiz A. Pereira da Silva, 2008. "The Impact of Macroeconomic Policies on Poverty and Income Distribution : Macro-Micro Evaluation Techniques and Tools," World Bank Publications, The World Bank, number 6586, April.
- Luc Savard, 2003. "Poverty and Income Distribution in a CGE-Household Micro-Simulation Model: Top-Down/Bottom Up Approach," Cahiers de recherche 0343, CIRPEE.
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