Trade reform and household welfare : the case of Mexico
The authors use a two-step, computationally simple procedure to analyze the effects of Mexico's potentially unilateral tariff liberalization. First, they use a computable general equilibrium model provided by the Global Trade Analysis Project (GTAP) as the new price generator. Second, they apply the price changes to Mexican household data to assess the effects of the simulated policy on poverty and income distribution. By choosing GTAP as the pricegenerator, the authors are able to model Mexico's differential tariff structure appropriately: almost zero for North American Free Trade Agreement (NAFTA) members and higher tariffs for nonmembers. Even starting with low tariff protection, simulation results show that tariff reform will have a positive effect on welfare for all expenditure deciles. Under an assumption of nonhomothetic individual preferences, trade liberalization benefits people in the poorer deciles more than those in the richer ones.
|Date of creation:||31 Aug 2001|
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- Huff, Karen & Thomas W. Hertel, 2001. "Decomposing Welfare Changes in GTAP," GTAP Technical Papers 308, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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- Paul Mosley & Steve Wiggins & Kerry Preibisch & Sharon Proctor, 1999. "The impact of agricultural policy liberalization on rural communities in Mexico," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(7), pages 1029-1042.
- Bautista, Romeo M. & Thomas, Marcelle, 1997. "Income Effects of Alternative Policy Trade Adjustments on Philippine Rural Households: A General Equilibrium Analysis," 1997 Conference, August 10-16, 1997, Sacramento, California 197068, International Association of Agricultural Economists.
- Nicholas Minot & Francesco Goletti, 1998. "Export Liberalization and Household Welfare: The Case of Rice in Vietnam," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 738-749.
- Hanoch, Giora, 1975. "Production and Demand Models with Direct or Indirect Implicit Additivity," Econometrica, Econometric Society, vol. 43(3), pages 395-419, May.
- Huff, Karen & Robert McDougall & Terrie Walmsley, 1999. "Contributing Input-Output Tables to the GTAP Data Base," GTAP Technical Papers 304, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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