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The Welfare Implications of Services Liberalization in a Developing Country: Evidence from Tunisia

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  • Mr. Nizar Jouini
  • Mr. Nooman Rebei

Abstract

We propose an integrated method based on a two-sector small open economy dynamic and stochastic general equilibrium model to estimate non-tariff barriers and quantify the impact of services liberalization. The major component of trade barriers is explicitly modeled through the introduction of entry-sunk costs. Hence, liberalization is treated assuming a government's policy decision aimed at reducing those costs. Then, we estimate the model using Bayesian techniques for Tunisia and the Euro Area. The paper presents a precise quantitative evaluation of services trade barriers as the difference between entry-sunk costs in Tunisia versus the Euro Area. We find significant welfare benefits in addition to aggregate and sectoral growth gains the Tunisian economy could attain following services liberalization. Surprisingly, the goods sector is the one that benefits the most from services liberalization in the short- and long-term horizons.

Suggested Citation

  • Mr. Nizar Jouini & Mr. Nooman Rebei, 2013. "The Welfare Implications of Services Liberalization in a Developing Country: Evidence from Tunisia," IMF Working Papers 2013/110, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2013/110
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    References listed on IDEAS

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    Cited by:

    1. Kawther Alimi & Mohamed Chakroun & Grégory Levieuge, 2019. "Diagnosis of Monetary Policy in Tunisia During the Last Decade: a DSGE Model Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(1), pages 348-364, March.

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