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Can Trade Policies Soften the Economic Impacts of an Avian Influenza Outbreak? Simulations From a CGE Model of the Philippines

Listed author(s):
  • U-Primo E. Rodriguez


    (College of Economics and Management, University of the Philippines Los Banos)

  • Yolanda T. Garcia


    (College of Economics and Management, University of the Philippines Los Banos)

  • Arnulfo G. Garcia


    (Southeast Asian Regional Center for Graduate Study and Research in Agriculture, Philippines)

  • Reynaldo T. Tan


    (College of Economics and Management, University of the Philippines Los Banos)

Registered author(s):

    The paper examines the possibilities of using trade policy to address the adverse economic effects of an avian influenza outbreak in the Philippines. In particular, it employs a computable general equilibrium (CGE) model for analyzing the likely effects of two options; namely, a) a ban on imported poultry, and b) the removal of tariffs on non-poultry meat products. Using six model scenarios (i.e., production shocks, consumption shocks, ban on poultry imports, removal of tariff on non-poultry imports, and selected combinations of these shocks), the simulation results reveal that (a) the consumption and production shocks are expected to have a contractionary effect on real GDP; (b) the expected fall in the output of poultry products explains most of the decline in real GDP; (c) the production shock appears to have a larger impact since this explains most of the decline in real GDP as well as the increase in the general price level; (d) while the consumption shock tends to have a larger impact on the poultry products, the production shock dominates the aggregate responses because of its effects on other industries, and (e) avian influenza is likely to have far-reaching effects on the economy, way beyond the poultry sector. Based on these results, this paper supports the use of an import ban as a preventive measure against the occurrence of an avian influenza attack. This is based on the finding that the economic costs from such a measure appear to be lower than the costs associated with the disease. In contrast, the study finds that there is a weak case for removing tariffs on non-poultry meat products as a means to soften the harmful impacts of an avian influenza outbreak.

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    Article provided by Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) in its journal Asian Journal of Agriculture and Development.

    Volume (Year): 4 (2007)
    Issue (Month): 2 (December)
    Pages: 41-50

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    Handle: RePEc:sag:seajad:v:4:y:2007:i:2:p:41-50
    Contact details of provider: Postal:
    College, Los BaƱos, Laguna 4031, Philippines

    Phone: (63-49) 536-2290
    Fax: (63-49) 536-7097
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    1. Cabalu, Helen & Rodriguez, U-Primo, 2007. "Trade-offs in Trade Liberalization: Evidence from the Philippine 2005 Tariff Changes," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 637-663.
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