IDEAS home Printed from https://ideas.repec.org/p/phd/dpaper/dp_2003-01.html
   My bibliography  Save this paper

Analyzing the Impact of Trade Reforms on Welfare and Income Distribution Using CGE Framework: The Case of the Philippines

Author

Listed:
  • Cororaton, Caesar B.

Abstract

Tariff reform, particularly tariff reduction, is one of the major economic reforms implemented in the last one and half decades in the Philippines. The paper attempts to analyze the effects of the tariff reduction from 1994 to 2000 on household income and welfare using a computable general equilibrium (CGE) model calibrated to the 1994 social accounting matrix (SAM). Insights that can be drawn from the tariff reduction experiments include: (a) significant drop in domestic prices; (b) improvement in export competitiveness through the effective depreciation in the real exchange rate; (c) reallocation of production and resources towards the non-food manufacturing sector, which is a dominant sector both in trade and production; (d) drop in agriculture wages and increase in production wages; and (f) factor substitution favoring skilled production workers. The effects on nominal income are biased against rural households. This is largely because of the decline in agriculture wages and the improvement in production wages. However, the significant drop in prices, especially consumer prices, offsets almost all of these negative effects. As a result, both real household income and consumption improve. Therefore, the tariff reduction program is generally welfare-improving as indicated by the positive increase in the equivalent variation (EV) both for total and across households.

Suggested Citation

  • Cororaton, Caesar B., 2003. "Analyzing the Impact of Trade Reforms on Welfare and Income Distribution Using CGE Framework: The Case of the Philippines," Discussion Papers DP 2003-01, Philippine Institute for Development Studies.
  • Handle: RePEc:phd:dpaper:dp_2003-01
    as

    Download full text from publisher

    File URL: https://serp-p.pids.gov.ph/serp-p/download.php?d=2210&s=3
    Download Restriction: no

    References listed on IDEAS

    as
    1. Cororaton, Caesar B., 2000. "Philippine Tariff Reforms: A CGE Analysis," Discussion Papers DP 2000-35, Philippine Institute for Development Studies.
    2. Cororaton, Caesar B., 1994. "Structural Adjustment Policy Experiments: The Use of Philippine CGE Models," Discussion Papers DP 1994-03, Philippine Institute for Development Studies.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Caesar B. Cororaton & John Cockburn, 2005. "Trade Reform and Poverty in the Philippines: a Computable General Equilibrium Microsimulation Analysis," Cahiers de recherche 0513, CIRPEE.
    2. Ann Pimentel-Prenio & Majah-Leah Ravago & Erlinda Medalla, 2007. "The AFTA-CEPT and the ASEAN China Early Harvest Program: An Assesment of Potential Short-run Impacts," Agriculture and Development Discussion Paper Series 2007-2, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA).
    3. Cororaton, Caesar B. & Cockburn, John, 2007. "Trade reform and poverty--Lessons from the Philippines: A CGE-microsimulation analysis," Journal of Policy Modeling, Elsevier, vol. 29(1), pages 141-163.
    4. Liao, Christine Marie & Pasadilla, Gloria O., 2004. "Determinants of Individual Trade Policy Preference in the Philippines," Discussion Papers DP 2004-16, Philippine Institute for Development Studies.
    5. Aldaba, Rafaelita M., 2008. "Can Imports Discipline Collusive Firms? The Case of the Philippine Cement Industry," Discussion Papers DP 2008-01, Philippine Institute for Development Studies.
    6. Cororaton, Caesar B., 2003. "Analyzing the Impact of Philippine Tariff Reform on Unemployment, Distribution and Poverty Using CGE-Microsimulation Approach," Discussion Papers DP 2003-15, Philippine Institute for Development Studies.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:phd:dpaper:dp_2003-01. 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: (Aniceto Orbeta). General contact details of provider: http://edirc.repec.org/data/pidgvph.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.