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The impact of tariff reduction on Bangladesh economy: a computable general equilibrium assessment

Author

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  • Hoque, Serajul

Abstract

This paper explores the effects of tariff reduction on macroeconomic indicators and sectoral output in Bangladesh using a computable general equilibrium approach. The simulation results indicate that a reduction in all tariffs expands gross domestic product and generates employment, which suggests that tariff cuts have a short-run stimulatory effect on economic growth. The industries that experience the greatest positive effects on their output and employment are export-oriented industries. There are also positive effects on the suppliers to these industries. Lightly-protected industries that rely heavily on imported intermediate inputs exhibit robust expansion, benefiting from a cost reduction as a result of the removal of protection. However, highly-protected, import-competing industries suffer a contraction in output and employment as they face increased competition from imports due to the liberalisation of trade.

Suggested Citation

  • Hoque, Serajul, 2005. "The impact of tariff reduction on Bangladesh economy: a computable general equilibrium assessment," MPRA Paper 16246, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:16246
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    File URL: https://mpra.ub.uni-muenchen.de/16246/1/MPRA_paper_16246.pdf
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    References listed on IDEAS

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    1. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
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    Cited by:

    1. Mukhopadhyay, Ujjaini & Chaudhuri, Sarbajit, 2011. "Economic liberalization, gender wage inequality and welfare – a theoretical analysis," MPRA Paper 32954, University Library of Munich, Germany.

    More about this item

    Keywords

    Trade liberalisation; computable general equilibrium model; Bangladesh;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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