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Trade liberalization, poverty and efficient equity

In: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects

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Listed:
  • Glenn W. Harrison
  • Thomas F. Rutherford
  • David G. Tarr

Abstract

Even if trade liberalization results in aggregate welfare gains over all households, it is possible that the poorest households could lose. We illustrate two approaches to designing trade liberalization in Turkey which ensure that the poor will not lose. The first approach uses direct compensation to losers. The second approach uses limited policy reform, where exceptions to the across-the-board reform are chosen to meet the equity goal. In each case, we map out some of the efficiency costs of attaining these equity goals so as to inform policy makers about the least costly way of attaining them.

Suggested Citation

  • Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Trade liberalization, poverty and efficient equity," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 11, pages 255-286 World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789814551434_0011
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    References listed on IDEAS

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    1. W. Jill Harrison & J. Mark Horridge & K.R. Pearson, 2000. "Decomposing Simulation Results with Respect to Exogenous Shocks," Computational Economics, Springer;Society for Computational Economics, vol. 15(3), pages 227-249, June.
    2. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    3. Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, number 9780226036335.
    4. Charles L. Ballard & Don Fullerton & John B. Shoven & John Whalley, 1985. "Introduction to "A General Equilibrium Model for Tax Policy Evaluation"," NBER Chapters,in: A General Equilibrium Model for Tax Policy Evaluation, pages 1-5 National Bureau of Economic Research, Inc.
    5. Böhringer, Christoph & Rutherford, Thomas F., 2000. "Decomposing the cost of Kyoto: a global CGE analysis of multilateral policy impacts," ZEW Discussion Papers 00-11, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Coller, Maribeth & Harrison, Glenn W. & Rutherford, Thomas F., 1996. "Efficient equity: Removing salary discrimination by meeting statistical legal constraints at least cost," Economics Letters, Elsevier, vol. 52(1), pages 81-88, July.
    7. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Economic implications for Turkey of a Customs Union with the European Union," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 16, pages 395-404 World Scientific Publishing Co. Pte. Ltd..
    8. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2017. "Quantifying The Uruguay Round," World Scientific Book Chapters,in: Trade Policies for Development and Transition, chapter 16, pages 363-388 World Scientific Publishing Co. Pte. Ltd..
    9. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    10. Thomas F. Rutherford & E. Elisabet Rutstrom & David Tarr, 2014. "Morocco's free trade agreement with the EU: A quantitative assessment," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 17, pages 405-437 World Scientific Publishing Co. Pte. Ltd..
    11. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Trade Policy Options for Chile: The Importance of Market Access," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 14, pages 329-359 World Scientific Publishing Co. Pte. Ltd..
    12. Roberto De Santis & H. Gazi Ozhan, 1997. "Social Accounting Matrix for Turkey 1990," Economic Systems Research, Taylor & Francis Journals, vol. 9(3), pages 281-285.
    13. Ballard, Charles L, 1988. "The Marginal Efficiency Cost of Redistribution," American Economic Review, American Economic Association, vol. 78(5), pages 1019-1033, December.
    14. Panagariya, Arvind & Rodrik, Dani, 1993. "Political-Economy Arguments for a Uniform Tariff," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 685-703, August.
    15. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    More about this item

    Keywords

    International Trade Policy; Developing Countries; Computable General Equilibrium; World Bank; Regional Trade Policy; Services Liberalization; Foreign Direct Investment; Trade and Poverty;

    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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