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Dynamic Gains and Market Access Insurance: Another look at the AUSFTA

Author

Listed:
  • Richard G. Harris

    () (Department of Economics, Simon Fraser University)

  • Peter E. Robertson

    () (School of Economics, The University of New South Wales)

Abstract

We use a dynamic computable general equilibrium model to revisit the dynamic benefits of the Australia-USA Free Trade Agreement and, in particular, to evaluate the insurance value of this agreement in the face of regional and global trade wars. The insurance benefits are quantified by comparing the status quo against alternative scenarios where some or all regions raise tariffs by 10 percent, both permanently and temporarily. These insurance gains are found to be as much as four times larger than the traditional status quo efficiency gains.

Suggested Citation

  • Richard G. Harris & Peter E. Robertson, 2007. "Dynamic Gains and Market Access Insurance: Another look at the AUSFTA," Discussion Papers 2007-23, School of Economics, The University of New South Wales.
  • Handle: RePEc:swe:wpaper:2007-23
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    File URL: http://wwwdocs.fce.unsw.edu.au/economics/Research/WorkingPapers/2007_23.pdf
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    References listed on IDEAS

    as
    1. Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2005. "Computational Analysis of the US FTAs with Central America, Australia and Morocco," The World Economy, Wiley Blackwell, vol. 28(10), pages 1441-1490, October.
    2. McKibbin, Warwick J. & Wilcoxen, Peter J., 1998. "The theoretical and empirical structure of the G-Cubed model," Economic Modelling, Elsevier, vol. 16(1), pages 123-148, January.
    3. Xiao-guang Zhang, 2006. "Armington Elasticities and Terms of Trade Effects in Global CGE Models," Staff Working Papers 0601, Productivity Commission, Government of Australia.
    4. Mahinda Siriwardana, 2006. "Australia's Involvement in Free Trade Agreements: An Economic Evaluation," Global Economic Review, Taylor & Francis Journals, pages 3-20.
    5. Brown, Drusilla K., 1987. "Tariffs, the terms of trade, and national product differentiation," Journal of Policy Modeling, Elsevier, vol. 9(3), pages 503-526.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Trade policy; Computable General Equilibrium; Human Capital; Dynamics;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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