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The Effects of Non-Tariff Measures on Prices, Trade, and Welfare: CGE Implementation of Policy-Based Price Comparisons

  • Andriamananjara, Soamiely
  • Dean, Judith M.
  • Feinberg, Robert
  • Ferrantino, Michael J.
  • Ludema, Rodney
  • Tsigas, Marinos E.

The global economic effects of eliminating certain significant categories of nontariff measures (NTMs) are estimated in a CGE context. As a first step, a database of institutional information identifying alleged instances of NTMs for particular products and countries is constructed based on WTO, U.S. Government, and EU sources, and compared with the UNCTAD policy inventory. This database is then concorded to a GTAP-feasible multiregion, multisector aggregation. Retail price data from the EIU CityData database, similarly concorded, are analyzed econometrically, taking into account systematic deviations from purchasing-power parity, to determine whether and to what extent the presence of alleged NTMs is associated with significantly higher prices. The estimated price effects are then used to calibrate a CGE simulation in order to obtain simulation estimates of trade and welfare effects of their removal, which can be disaggregated. Removal of the categories of NTMs under consideration yields global gains on the order of $90 billion. These gains arise notably from liberalization by Japan and the European Union by region, and from liberalization of apparel and machinery/equipment by sector.

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Paper provided by United States International Trade Commission, Office of Economics in its series Working Papers with number 15863.

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Date of creation: 2004
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Handle: RePEc:ags:uitcoe:15863
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  1. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
  2. Joseph F. Francois & Hans H. Glismann & Dean Spinanger, 2000. "The Cost of EU Trade Protection in Textiles and Clothing," Kiel Working Papers 997, Kiel Institute for the World Economy.
  3. Alan V. Deardorff & Robert M. Stern, 1997. "Measurement of Non-Tariff Barriers," OECD Economics Department Working Papers 179, OECD Publishing.
  4. Kees Jan Van Garderen & Chandra Shah, 2002. "Exact interpretation of dummy variables in semilogarithmic equations," Econometrics Journal, Royal Economic Society, vol. 5(1), pages 149-159, June.
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