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Trade Liberalization in General Equilibrium: Intertemporal and Inter-industry Effects

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  • Lawrence H. Goulder
  • Barry Eichengreen

Abstract

A computable general equilibrium model is used to examine effects of removing U.S. tariff and non-tariff barriers to trade. The model differs from traditional disaggregated trade models in its attention to intertemporal decision-making, adjustment dynamics, and international capital mobility. Unilateral elimination of tariffs would reduce the welfare of U.S. households by 0.4 percent. Elimination of quantitative restrictions, in contrast, would increase U.S. welfare by 1.1 percent. The international cross-ownership of capital associated with internationally mobile capital significantly influences the distribution of capital gains and losses from trade liberalization. Disregarding cross-ownership leads to understatement of the domestic welfare losses from tariff removal and overstatement of the domestic welfare gains from eliminating quantitative restrictions.

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  • Lawrence H. Goulder & Barry Eichengreen, 1992. "Trade Liberalization in General Equilibrium: Intertemporal and Inter-industry Effects," Canadian Journal of Economics, Canadian Economics Association, vol. 25(2), pages 253-280, May.
    • Handle: RePEc:cje:issued:v:25:y:1992:i:2:p:253-80
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    2. Mohamed Ali Marouani, 2007. "Is the End of the MFA a threat for the Tunisian Economy?," Working Papers DT/2007/05, DIAL (Développement, Institutions et Mondialisation).
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    11. Vinokurov, Evgeny & Demidenko, Mikhail & Pelipas, Igor & Tochitskaya, Irina & Shymanovich, Gleb & Lipin, Andrey & Movchan, Veronika, 2015. "Estimating the Economic Effects of Reducing Non-Tariff Barriers in the EEU," MPRA Paper 68058, University Library of Munich, Germany.
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    16. Aremo Adeleke Gabriel, 2013. "Trade Liberalisation, Economic Growth and Human Resource Development in Nigeria: Causal Implications (1980-2009)," Journal of Economics and Behavioral Studies, AMH International, vol. 5(10), pages 696-707.
    17. Lolos, Sarantis & Suwa-Eisenmann, Akiko & Zonzilos, Nicholas & Bourguignon, Francois, 1995. "Evaluating the CSF with an extended computable general equilibrium model: The case of Greece (1988-1995)," Journal of Policy Modeling, Elsevier, vol. 17(2), pages 177-197, April.
    18. Marouani, Mohamed A., 2005. "The Impact of the Multifiber Agreement Phaseout on Unemployment in Tunisia: A Prospective Dynamic Analysis," University of Göttingen Working Papers in Economics 39, University of Goettingen, Department of Economics.
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