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On Trade Policy Reform and the Missing Revenue: an Application to Mozambique

Author

Listed:
  • Channing Arndt

    (Purdue University)

  • Finn Tarp

    (Institute of Economics, University of Copenhagen)

Abstract

In many developing countries, large discrepancies exist between revenues implied by published tariff rates multiplied by estimated import volumes and actual receipts. We develop a stylized trade model where average and marginal tariff rates diverge and incorporate insights from this model into a computable general equilibrium model of Mozambique to study the implications of trade policy reform. Model simulations indicate that lowering tariff rates and reducing duty free importation in a manner that maintains official revenue benefits nearly everyone with the main exception being those, who benefited from duty free imports in the base.

Suggested Citation

  • Channing Arndt & Finn Tarp, 2004. "On Trade Policy Reform and the Missing Revenue: an Application to Mozambique," Discussion Papers 04-19, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:0419
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    File URL: http://www.econ.ku.dk/english/research/publications/wp/2004/0419.pdf/
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    References listed on IDEAS

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    1. John McLaren, 1996. "Corruption, Black Markets, and the Fiscal Problem in LDCs: Some Recent Findings," Eastern Economic Journal, Eastern Economic Association, vol. 22(4), pages 491-502, Fall.
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    3. Jensen, Tarp & Tarp, Finn, 2007. "Agricultural Technology and Marketing Margins in Vietnam," MPRA Paper 29820, University Library of Munich, Germany.
    4. Fontana, Marzia & Wood, Adrian, 2000. "Modeling the Effects of Trade on Women, at Work and at Home," World Development, Elsevier, vol. 28(7), pages 1173-1190, July.
    5. Elbehri, Aziz & Ken Pearson, 2000. "Implementing Bilateral Tariff Rate Quotas in GTAP using GEMPACK," GTAP Technical Papers 475, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    6. L Alan Winters, 2004. "Trade Liberalisation and Economic Performance: An Overview," Economic Journal, Royal Economic Society, vol. 114(493), pages 4-21, February.
    7. Arndt, Channing & Robinson, Sherman & Tarp, Finn, 2002. "Parameter estimation for a computable general equilibrium model: a maximum entropy approach," Economic Modelling, Elsevier, vol. 19(3), pages 375-398, May.
    8. Pitt, Mark M., 1981. "Smuggling and price disparity," Journal of International Economics, Elsevier, vol. 11(4), pages 447-458, November.
    9. Devaragan, Shantayanan & Lewis, Jeffrey D. & Robinson, Sherman, 1990. "Policy lessons from trade-focused, two-sector models," Journal of Policy Modeling, Elsevier, vol. 12(4), pages 625-657.
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    15. Tarp, Finn & Arndt, Channing & Jensen, Henning Tarp & Robinson, Sherman & Heltberg, Rasmus, 2002. "Facing the development challenge in Mozambique: an economywide perspective," Research reports 126, International Food Policy Research Institute (IFPRI).
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    Cited by:

    1. Channing Arndt & Sherman Robinson & Finn Tarp, 2006. "Trade Reform and Gender in Mozambique," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 32, pages 73-89.
    2. Arndt, Channing, 2005. "The Doha Trade Round and Mozambique," Policy Research Working Paper Series 3717, The World Bank.

    More about this item

    Keywords

    trade policy; public revenue; Mozambique;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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