IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Pitfalls in the Use of Ad valorem Equivalent Representations of the Trade Impacts of Domestic Policies

  • John Whalley

Numerical simulation exercises to analyze the impacts of potential changes in non-tariff policies commonly use ad valorem equivalent tariff treatment even though estimated impacts using explicit model representation and ad valorem equivalent treatments will differ. The difficulty for modellers is that the detail and subtlety embodied in a wide array of policy interventions means that some simplification is appealing, but no meaningful general propositions exist in the theoretical literature as to the sign or size of the differences in predicted effects. All that can seemingly be done is to investigate the differences case by case, but even here the findings are sensitive both to the particular form of model used as well as the model parameterization employed. As a result, there is relatively little in the literature that provides guidance as to how serious the pitfalls may be, and how misleading ad valorem tariff equivalent treatment is. Here I draw on three examples of numerical modelling where explicit representation of policy interventions are used. The picture that emerges is one of large quantitative and even qualitative differences in predicted impacts. These examples suggest that where interventions differ from a tariff, ad valorem representation should be undertaken in numerical trade modelling only with substantial caveats.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2005/wp-cesifo-2005-06/cesifo1_wp1480.pdf
Download Restriction: no

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1480.

as
in new window

Length:
Date of creation: 2005
Date of revision:
Handle: RePEc:ces:ceswps:_1480
Contact details of provider: Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo.de
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Trela, Irene & Whalley, John & Wigle, Randall, 1987. " International Trade in Grains: Domestic Policies and Trade Impacts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 89(3), pages 271-83.
  2. Hamada, Koichi, 1974. "An economic analysis of the duty-free zone," Journal of International Economics, Elsevier, vol. 4(3), pages 225-241, August.
  3. Lisandro Abrego & Raymond Riezman & John Whalley, 2001. "How Reasonable Are Assumptions Used in Theoretical Models?: Computational Evidence on the Likelihood of Trade Pattern Changes," NBER Working Papers 8169, National Bureau of Economic Research, Inc.
  4. Edgar Cudmore & John Whalley, 2003. "Border Delays and Trade Liberalization," NBER Working Papers 9485, National Bureau of Economic Research, Inc.
  5. Fukuda, Shin-ichi & Hoshi, Takeo & Ito, Takatoshi & Rose, Andrew, 2006. "International Finance," Journal of the Japanese and International Economies, Elsevier, vol. 20(4), pages 455-458, December.
  6. Emine Gürgen & Thomas A. Wolf, 2000. "Improving Governance and Fighting Corruption in the Baltic and CIS Countries; The Role of the IMF," IMF Working Papers 00/1, International Monetary Fund.
  7. John Whalley, 2003. "Liberalization in China's Key Service Sectors Following WTO Accession: Some Scenarios and Issues of Measurement," NBER Working Papers 10143, National Bureau of Economic Research, Inc.
  8. Chi-Yung Ng & John Whalley, 2004. "Geographical Extension of Free Trade Zones as Trade Liberalization: A Numerical Simulation Approach," CESifo Working Paper Series 1147, CESifo Group Munich.
  9. Rodriguez, Carlos Alfredo, 1976. "A note on the economics of the duty free zone," Journal of International Economics, Elsevier, vol. 6(4), pages 385-388, November.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_1480. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.