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Impacts of Trade Reform: Sensitivity of Model Results to Key Assumptions

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Listed author(s):
  • Ernesto Valenzuela

    ()

    (School of Economics, University of Adelaide)

  • Kym Anderson

    ()

    (School of Economics, University of Adelaide)

  • Thomas Hertel

    ()

    (Department of Agricultural Economics, Purdue University)

Abstract

The WTOÂ’s Doha Development Agenda has generated demand for estimates of the potential economic consequences of global trade reform. Recent improvements in the GTAP dataset have provided a much better representation of tariff restrictions as of 2001. However, despite its use by most global trade modelers, substantial differences in results emerge from different computable general equilibrium exercises. To help understand these differences, this paper examines the sensitivity of full global and regional trade liberalization results from the GTAP model, using the GTAP version 6.1 database, to different assumptions about factor mobility, fiscal neutrality, macro-economic closure, and trade (Armington) elasticities.

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Paper provided by University of Adelaide, Centre for International Economic Studies in its series Centre for International Economic Studies Working Papers with number 2007-09.

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Length: 48 pages
Date of creation: Oct 2007
Handle: RePEc:adl:cieswp:2007-09
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Keywords: Trade policy reform; WTO; agricultural trade; computable general equilibrium.;

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Find related papers by JEL classification:
  • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
  • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
  • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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  1. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2006. "Would Multilateral Trade Reform Benefit Sub-Saharan Africans?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(4), pages 626-670, December.
  2. Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications, The World Bank, number 6889, June.
  3. Anderson, Kym & Valenzuela, Ernesto, 2006. "WTO's Doha Cotton Initiative: A Tale of Two Issues," CEPR Discussion Papers 5567, C.E.P.R. Discussion Papers.
  4. Brown, Drusilla K. & Kiyota, Kozo & Stern, Robert M., 2005. "Computational analysis of the Free Trade Area of the Americas (FTAA)," The North American Journal of Economics and Finance, Elsevier, vol. 16(2), pages 153-185, August.
  5. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2006. "Distortions to World Trade: Impacts on Agricultural Markets and Farm Incomes," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(2), pages 168-194.
  6. Hertel, Thomas & Hummels, David & Ivanic, Maros & Keeney, Roman, 2007. "How confident can we be of CGE-based assessments of Free Trade Agreements?," Economic Modelling, Elsevier, vol. 24(4), pages 611-635, July.
  7. Kehoe, Timothy J & Polo, Clemente & Sancho, Ferran, 1995. "An Evaluation of the Performance of an Applied General Equilibrium Model of the Spanish Economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(1), pages 115-141, June.
  8. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr & Angelo Gurgel, 2004. "Trade Policy and Poverty Reduction in Brazil," World Bank Economic Review, World Bank Group, vol. 18(3), pages 289-317.
  9. Tyers,Rod & Anderson,Kym, 2011. "Disarray in World Food Markets," Cambridge Books, Cambridge University Press, number 9780521172318, November.
  10. Joseph Francois & Hans Van Meijl & Frank Van Tongeren, 2005. "Trade liberalization in the Doha Development Round," Economic Policy, CEPR;CES;MSH, vol. 20(42), pages 349-391, 04.
  11. Keeney, Roman & Thomas Hertel, 2005. "GTAP-AGR : A Framework for Assessing the Implications of Multilateral Changes in Agricultural Policies," GTAP Technical Papers 1869, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  12. Xiao-guang Zhang, 2006. "Armington Elasticities and Terms of Trade Effects in Global CGE Models," Staff Working Papers 0601, Productivity Commission, Government of Australia.
  13. Valenzuela, Ernesto & Hertel, Thomas & Keeney, Roman & Reimer, Jeff, 2005. "Assessing Global CGE Model Validity Using Agricultural Price Volatility," GTAP Working Papers 1875, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  14. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
  15. Athukorala, Premachandra & Riedel, James, 1994. "Demand and Supply Factors in the Determination of NIE Exports: A Simultaneous Error-Correction Model for Hong Kong: A Comment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1411-1414, November.
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Cited by:

  1. Regmi, Anita & Seale, James L., Jr., 2010. "Cross-Price Elasticities of Demand Across 114 Countries," Technical Bulletins 59870, United States Department of Agriculture, Economic Research Service.
  2. Meade, Birgit & Muhammad, Andrew, 0. "New International Evidence on Food Consumption Patterns: A Focus on Cross-Price Effects Based on 2005 International Comparison Program Data," Amber Waves, United States Department of Agriculture, Economic Research Service, issue 03, April.
  3. Dorothee Flaig & Harald Grethe & Scott McDonald & Khalid Siddig, 2012. "Intersectoral factor movements: do adjustment costs matter for welfare?," EcoMod2012 4418, EcoMod.
  4. James Scott & Rorden Wilkinson, 2012. "Changing of the guard: expert knowledge and ‘common sense’ in the Doha Development Agenda," Brooks World Poverty Institute Working Paper Series 16612, BWPI, The University of Manchester.
  5. Németh, Gabriella & Szabó, László & Ciscar, Juan-Carlos, 2011. "Estimation of Armington elasticities in a CGE economy-energy-environment model for Europe," Economic Modelling, Elsevier, vol. 28(4), pages 1993-1999, July.
  6. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2013. "Estimating Effects of Price-Distorting Policies Using Alternative Distortions Databases," Handbook of Computable General Equilibrium Modeling, Elsevier.
  7. Jean-Christophe Bureau & Sébastien Jean, 2013. "International Agricultural Trade and Negotiations : Coping with a New Landscape," FOODSECURE Working papers 8, LEI Wageningen UR.
  8. Morey, Mitchell, 2016. "Preferences and the home bias in trade," Journal of Development Economics, Elsevier, vol. 121(C), pages 24-37.
  9. James Scott, 2012. "Squeezing the state: tariff revenue, state capacity and the WTO’s Doha Round," Brooks World Poverty Institute Working Paper Series 16912, BWPI, The University of Manchester.
  10. Muhammad, Andrew & Seale, James L. & Meade, Birgit Gisela Saager & Regmi, Anita, 2011. "International Evidence on Food Consumption Patterns: An Update Using 2005 International Comparison Program Data," Technical Bulletins 184306, United States Department of Agriculture, Economic Research Service.
  11. Dandres, Thomas & Gaudreault, Caroline & Tirado-Seco, Pablo & Samson, Réjean, 2012. "Macroanalysis of the economic and environmental impacts of a 2005–2025 European Union bioenergy policy using the GTAP model and life cycle assessment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(2), pages 1180-1192.
  12. Olekseyuk, Zoryana & Schürenberg-Frosch, Hannah, 2016. "Are Armington elasticities different across countries and sectors? A European study," Economic Modelling, Elsevier, vol. 55(C), pages 328-342.
  13. Dandres, Thomas & Gaudreault, Caroline & Seco, Pablo Tirado & Samson, Réjean, 2014. "Uncertainty management in a macro life cycle assessment of a 2005–2025 European bioenergy policy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 36(C), pages 52-61.
  14. McCleery, Robert & DePaolis, Fernando, 2014. "So you want to build a trade model? Available resources and critical choices," Economic Modelling, Elsevier, vol. 40(C), pages 199-207.
  15. Athukorala, Premachandra & Riedel, James, 1994. "Demand and Supply Factors in the Determination of NIE Exports: A Simultaneous Error-Correction Model for Hong Kong: A Comment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1411-1414, November.
  16. Andrew Mold & Rodgers Mukwaya, 2015. "The Effects of the Tripartite Free Trade Area: Towards a New Economic Geography in Southern, Eastern and Northern Africa?," Discussion Papers 2015-04, University of Nottingham, CREDIT.
  17. Hillberry, Russell & Hummels, David, 2013. "Trade Elasticity Parameters for a Computable General Equilibrium Model," Handbook of Computable General Equilibrium Modeling, Elsevier.

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