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Poverty Vulnerability and Trade Policy: Are the Likely Impacts Discernable?

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  • Valenzuela, Ernesto
  • Hertel, Thomas W.

Abstract

Trade policy reform prospects have generated debate about the impacts on poverty. Some critics assert that price changes induced by trade reform are minimal and may not be distinguishable from price fluctuations induced by other shocks to the global economy. This paper addresses this issue by developing an approach to assess whether poverty changes induced by trade reform can be statistically discernable, based on a comparison in the grains sector. Fluctuations in grains markets are implemented by incorporating stochastic simulations into a CGE model of the global economy. The resulting price distributions are inputted to a micro-simulation based on national household surveys. The conclusions are based on the comparison of the resulting poverty distributions from the weather-induced variability only, versus the combined effect of the latter and trade reform. Results indicate that, in this conservative approach of evaluating only the global grains markets, the short-run impacts on poverty of trade liberalization can not be distinguished from market volatility in some countries.

Suggested Citation

  • Valenzuela, Ernesto & Hertel, Thomas W., 2006. "Poverty Vulnerability and Trade Policy: Are the Likely Impacts Discernable?," 2006 Annual meeting, July 23-26, Long Beach, CA 21397, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea06:21397
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    International Relations/Trade;

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