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An Intervention Analysis of a Trade Policy

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We Develop An Intervention Model Based On Ju And Krishna’s Suffi Cient Condition For A Trade Reform Policy To Be Welfare Improving. The Welfare Improving Condition Requires That The Mean Value Of Net Imports Of A Country Evaluated At Post-Intervention Prices Be Higher Than That Before The Intervention. To Compare The Two Mean Values We Introduce An Intervention Dummy In The Model. We Apply This Model To Evaluate The Impact Of NAFTA On Mexican Welfare. Our Study Fi Nds That The Intervention Dummy Is Negative, But Insignifi Cant. This Result Fails To Meet The Suffi Cient Condition For Welfare Improvement. Consequently, We Do Not Reject The Hypotheses That Mexican Welfare Has Not Changed (Increased Or Decreased) Due To NAFTA.

Suggested Citation

  • Adhikari, Deergha Raj, 2006. "An Intervention Analysis of a Trade Policy," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 59(3), pages 277-284.
  • Handle: RePEc:ris:ecoint:0075
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    Keywords

    NAFTA; Revealed-Preference; Trade-Reform; Welfare; Intervention-Analysis;

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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