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Are the Poverty Effects of Trade Policies Invisible?

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  • Verma, Monika
  • Valenzuela, Ernesto
  • Hertel, Thomas

Abstract

With the advent of the WTO‘s Doha Development Agenda, as well as the Millennium Development Goals aiming to reduce poverty by 50 percent by 2015, poverty impacts of trade reforms have attracted increasing attention. This has been particularly true of agricultural trade reform due to the importance of food in the diets of the poor, relatively higher protection in agriculture, as well as the heavy concentration of global poverty in rural areas where agriculture is the main source of income. Yet some in this debate have argued that, given the extreme volatility in agricultural commodity markets, the additional price and poverty impacts due to trade liberalization might well be undetectable. This paper formally tests this ―invisibility hypothesis‖ via stochastic simulation of a computable general equilibrium framework. The hypothesis test is based on the comparison of two sets of price and poverty distributions. The first originates solely from the inherent variability in global staple grains markets, while the second combines the effects of this inherent variability and trade reform. Results indicate that the short-run impacts of trade liberalization on poverty are not distinguishable from market volatility in majority of the fifteen focus countries – suggesting that the poverty impacts of agricultural trade liberalization may indeed be invisible.

Suggested Citation

  • Verma, Monika & Valenzuela, Ernesto & Hertel, Thomas, 2011. "Are the Poverty Effects of Trade Policies Invisible?," Conference papers 332147, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
  • Handle: RePEc:ags:pugtwp:332147
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    References listed on IDEAS

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    Cited by:

    1. Mathilde Douillet, 2012. "Trade policies and agriculture in Sub-Saharan Africa Comparative analysis in a Computable General Equilibrium framework [Politiques commerciales et agriculture en Afrique Sub-Saharienne : analyse c," SciencePo Working papers Main tel-03676037, HAL.
    2. repec:spo:wpecon:info:hdl:2441/45eb019724sn6sg9melpggksl is not listed on IDEAS
    3. Mathilde Douillet, 2012. "Trade policies and agriculture in Sub-Saharan Africa: Comparative analysis in a Computable General Equilibrium framework," Sciences Po publications info:hdl:2441/45eb019724s, Sciences Po.
    4. Ans Kolk & Miguel Rivera-Santos & Carlos Rufín, 2018. "Multinationals, international business, and poverty: A cross-disciplinary research overview and conceptual framework," Journal of International Business Policy, Palgrave Macmillan, vol. 1(1), pages 92-115, June.
    5. Artavia, Marco & Grethe, Harald & Zimmermann, Georg, 2015. "Stochastic market modeling with Gaussian Quadratures: Do rotations of Stroud's octahedron matter?," Economic Modelling, Elsevier, vol. 45(C), pages 155-168.
    6. Phimister, Euan & Roberts, Deborah, "undated". "Allowing for uncertain and asymmetric policy shocks: a CGE analysis of the impacts of on-shore wind farm developments in north east Scotland," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182663, European Association of Agricultural Economists.
    7. repec:hal:wpspec:info:hdl:2441/45eb019724sn6sg9melpggksl is not listed on IDEAS
    8. repec:hal:spmain:info:hdl:2441/45eb019724sn6sg9melpggksl is not listed on IDEAS
    9. Verma, Monika & Hertel, Thomas W. & Preckel, Paul V., 2011. "Predicting within country household food expenditure variation using international cross-section estimates," Economics Letters, Elsevier, vol. 113(3), pages 218-220.
    10. Martin Carnoy & Prashant Loyalka & Gregory Androushchak & Anna Proudnikova, 2012. "The Economic Returns to Higher Education in the BRIC Countries and their Implications for Higher Education Expansion," HSE Working papers WP BRP 02/EDU/2012, National Research University Higher School of Economics.

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    More about this item

    Keywords

    Food Security and Poverty; International Relations/Trade;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • 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
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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