assessing the global poverty effects of antimicrobial resistance abstract as a result of antimicrobial resistance amr economies will experience an increase in mortality reduced productivity for labor and the livestock sector and increased health care costs this paper assesses the potential global poverty impacts of amr using a unique macro micro framework to estimate poverty effects of amr price wage and employment results from a dynamic multi country multi sector computable general equilibrium cge model are used in a microsimulation model that integrates household surveys from 104 countries the analysis in this paper advances other studies of amr in two ways 1 it links macro results to a microsimulation model to provide insight on poverty impacts for the world economy and countries of different income levels and 2 it uses a global multi sector model rather than an aggregate global model to generate macroeconomic results with structural details for capturing the economy wide impact within countries and the spread across countries via trade flows relative to a world without amr the progression of antimicrobial resistance is expected to make it more difficult to eliminate extreme poverty potentially adding 24 1 million people to become extremely poor of whom 18 7 million live in low income countries the expected losses during 2015 50 may sum to 85 trillion in gross domestic product and 23 trillion in global exports in present value by 2050 the global gross domestic product could deviate negatively by 3 8 percent from the baseline in the worst case scenario considered because it is a global public bad the optimal policy response will require global cooperation the poverty outcomes induced by amr in all country groups will deteriorate with short sighted isolationist policies moreover assistance from high income countries to improve the economic resiliency of lower income countries will also benefit the higher income countries and world economy in general

dairy tariff quota liberalization contrasting bilateral and most favored nation reform options we develop a highly disaggregated tariff line source differentiated partial equilibrium model of u s specialty cheese imports to investigate alternative reform options for tariffrate quotas a mixed complementarity framework is used to represent bilateral and multilateral tariff quota administration methods within the u s dairy industry the impact of liberalizing u s specialty cheese imports via bilateral and multilateral tariffrate quota expansions out of quota tariff cuts and simultaneous liberalization scenarios is evaluated we find that the path of liberalization is quite different depending on the reform approach undertaken the results have important policy implications in the agricultural negotiations

impact of switching production to bioenergy crops the switchgrass example this paper reports the results from simulations that evaluate the general equilibrium effects of substituting switchgrass a biomass for crude oil in usa petroleum production the new production process is less efficient and usa gdp declines slightly as switchgrass production expands usa agriculture contracts and the world price of cereals increases the world price of crude oil falls as usa import demand declines the net effect of the price and income changes is a general decline in economic welfare moreover the declines in welfare are proportionately greater for developing countries who produce small quantities of agricultural commodities whose prices increase

assessing feed in tariffs on wind power installation and industry development in taiwan abstract this study assesses the policy effects of feed in tariffs fits on taiwan s use of wind power and the growth of the country s wind power industry this study uses the system dynamics approach to develop a simulation model to assess the fit policy the simulation covering 2013 to 2025 shows that the fit scheme impacts taiwan s installed wind power capacity significantly before the targeted capacity is achieved on average a 10 increase in the fit price based on the 2013 price results in a one year early achievement of the target by contrast a 10 reduction in the fit price based on the 2013 price delays the achievement of the target by two to three years moreover the fit scheme can facilitate growth in taiwan s wind power industry every 10 increase or decrease in the fit increases or decreases industry growth by 1 12 when the fit is increased by 10 from 2 6258 nt kw h the 2020 cumulative output value of taiwan s wind power industry increases from nt 105 81 billion to nt 107 00 billion an increase of nt 1 19 billion the findings of this study indicate that the fit scheme is a policy tool that can achieve reductions in carbon emissions and facilitate the development of taiwan s wind power industry

estimating the distortionary effects of ethnic quotas in singapore using housing transactions abstract desegregation is a key policy issue in many countries i investigate a residential desegregation program in singapore the ethnic housing quotas i show that choice restrictions imposed on apartment blocks above the quota limits constrained could have distortionary effects causing price and quantity differences for constrained versus unconstrained blocks i test these predictions by hand matching more than 500 000 names in the phonebook to ethnicities to calculate ethnic proportions at the apartment block level i can then investigate differences for constrained and unconstrained blocks close to the quota limits and test for sorting around the limits i find that price differences are between 3 and 5 quantity effects are economically significant translating to longer time on market durations selection cannot fully explain these results my results point to challenges in achieving desegregation using quantity restrictions

macroeconomics financial variables and computable general equilibrium models abstract this paper surveys micro macro computable general equilibrium cge models that incorporate asset markets and product and factor markets recent models are designed to analyze the impact on economic performance and the distribution of income in developing economies of structural adjustment and stabilization programs implemented in response to macro shocks these financial cge models add a loanable funds market incorporating a variety of assets to a cge model that already incorporates flow equilibria in product and factor markets these financial models start from tradefocused cge models and also draw on earlier work with micro and macrostructuralist models in specifying the interactions between financial variables and the real side of the economy the paper also compares these models to dynamic macro models both short run adaptive models with lagged adjustment mechanisms and longer run forward looking models the paper discusses the theoretical problems such models face in reconciling micro focused cge models with macro models incorporating dynamic behavior

commercial policy and the domestic carrying trade in this paper the authors examine the economic consequences of existing u s restrictions on trade in domestic water transportation cabotage services they briefly trace the history of u s policy on cabotage the authors also use an applied general equilibrium model of the united states to analyze the effects of the jones act on welfare and on production trade and employment in important upstream and downstream sectors the economic effects of u s maritime policies rank them with u s trade policies like the mfa the automobile and steel quotas of the mid 1980s and agricultural import restraints coauthors are hugh m arce kenneth a reinert and joseph e flynn

the optimality of tariff quotas under uncertainty abstract a tariff quota is a schedule of tariffs in which the tariff rate steps upward as imports exceed some critical quantity or value this has desirable properties in the face of uncertainty about domestic demand and supply and about foreign supply we show that a specific ad valorem tariff quota is the policy maximizing domestic expected surplus subject to constraints on average imports import expenditure and on the average amount by which imports import expenditure exceed some critical value

promotion turnover and preemptive wage offers this paper examines the strategic promotion and wage decisions of employers when employees may be more valuable to competing firms competing employers must incur a cost to learn the quality of their match with a manager promotion signals that workers are potentially valuable managers in other firms and so can lead to turnover to preempt competition for a manager an employer may offer a wage high enough to discourage competitors from acquiring information and bidding up the wage further or hiring the worker away this transfers wages from good workers to bad more costly information acquisition yields greater expected lifetime wages copyright 1993 by american economic association

up or out contracts a signaling perspective a firm will typically gather information concerning its own workers that is not available to other potential employers while other firms will attempt to reduce this information asymmetry by observing the actions of the initial employer i argue that this process can be important in environments characterized by up or out contracts in that the retention decision can serve as a signal of productivity the article investigates this argument in an environment where up or out contracts are employed because they provide workers with an incentive to accumulate general human capital and where learning takes place in a diffuse fashion

optimal allocation of quotas abstract consider a government which fixed the supply of a good e g by an import quota suppose the market for the good can be partitioned e g sales in different years or in different areas of the country can be considered sales in different markets we show that maximization of consumer surplus in the domestic economy may require segmentation of the domestic market into two but no more parts

the asymmetric effects of reversible tariff changes under the united states gsp in a partial equilibrium textbook model of competitive international trade the volume and net value of imports always vary inversely with the tariff rate this result depends on assumptions that the tariff changes are substantial exogenous permanent and applied on a most favorednation mfn basis empirical applications of this theory however encounter different conditions generalequilibrium effects such as changes in prices exchange rates and income tend to be offsetting imperfect competition can make the incidence of the tariff indeterminate many tariff changes are small endogenous temporary and or discriminatory to illustrate how these differences in tariffs can alter their observed relation to imports we offer the following examples a tokyo round cuts in u s tariffs were staged generally over eight years and averaged only 0 3 percent per annum 6 as compared to 6 4 percent average annual changes in american import prices over the same 1980 87 period 18 if search and recontracting costs caused buyers to ignore relatively small price variations then many observed tariff changes would produce negligible effects b governments tend to lower tariffs when imports are low enough to obviate political problems and they raise them as a response to import surges observers who ignore this endogeneity might conclude that imports are positively related to tariff rates c while many tariff concessions are bound under the gatt some duties are temporarily altered to provide import relief for domestic producers or preferential access for certain trade partners importers may not respond if the temporary benefits of doing so are exceeded by the costs of finding substitutes d the importers response to a tariff change will also differ between cases where some or all imports of a given product are affected a discriminatory tariff change might shift the shares of suppliers while leaving total imports virtually unaltered empirical studies seldom test the relation between imports and tariffs directly time series estimates of import demand equations usually subsume the tariff in a gross price variable

global models applied to agricultural and trade policies a review and assessment the continuing process of global integration bears implications for farmers and related supplying and processing industries in all parts of the world but also for the rest of the world economy an assessment of agricultural and trade policy impacts is bound to be complex and is often supported by quantitative modeling analysis this article provides an assessment of the present state of applied modelling in the area of trade and agricultural policies we provide in this paper a comparative assessment of alternative modelling approaches considering a total of 16 partial equilibrium and general equilibrium models the assessment includes theoretical modelling foundations datasets employed and institutional aspects such as model maintenance and dissemination of results a typology of models is provided by structuring the assessment along a clear set of evaluation criteria

an empirical model of mark ups in a quality differentiated export market abstract this paper develops an empirical model to allow for imperfect competition in the market for traded goods a simultaneous equation model incorporating the demand for and supply of taiwanese footwear exports to the united states is specified and estimated the model allows the identification of two separate sources of mark ups in export prices the first comes from the u s imposed quantitative restriction on these exports the second comes from imperfect competition in the international market for these exports the results suggest competitive behavior by taiwanese footwear exporters the quantitative restriction resulted in a 16 9 percent mark up of prices over marginal cost

project appraisal procedures and the evaluation of foreign exchange different procedures for evaluating foreign exchange have been suggested in the project appraisal manuals of unido and little and mirrlees while it is widely agreed that the manuals differ in their practical procedures there has been disagreement as to whether they are equivalent in principle using a model due to boadway we show that the manuals differ in principle the little mirrlees procedure can be given an interpretation which correctly values traded and non traded goods in project appraisal while the unido formula for the shadow exchange rate is not required when the balance of payments constraint is binding

asian growth and trade poles india china and east and southeast asia summary using a global general equilibrium trade model this study analyzes the impact on developing countries of 1 the dramatic expansion of trade by india china and an integrated east and southeast e se asia trade bloc and 2 productivity growth in the region china is an integral member of the e se asia bloc with strong links through value chains and trade in intermediate inputs while india is not a part of any trade bloc the analyses consider the importance of their different degrees of integration into regional and global economies focusing on potential complementarities and competition with other developing countries

energy and economic growth in the usa a multivariate approach abstract this paper examines the causal relationship between gdp and energy use for the period 1947 90 in the usa the relationship between energy use and economic growth has been examined by both biophysical and neoclassical economists in particular several studies have tested for the presence of a causal relationship in the granger sense between energy use and economic growth however these tests do not allow a direct test of the relative explanatory powers of the neoclassical and biophysical models a multivariate adaptation of the test vector autoregression var does allow such a test a var of gdp energy use capital stock and employment is estimated and granger tests for causal relationships between the variables are carried out although there is no evidence that gross energy use granger causes gdp a measure of final energy use adjusted for changing fuel composition does granger cause gdp

electrical energy usage over the business cycle causality from macroeconomic conditions to electrical usage overall and in the residential commercial industrial and other sectors is examined the paper shows that changes in macroeconomic conditions cause significant changes in electrical usage in the commercial and industrial sectors and overall in addition the paper shows that causality occurs at business cycle frequencies and that there are asymmetries over the business cycle an implication is that forecasts used to assess the probability of exceeding capacity constraints should incorporate forecasts of macroeconomic conditions asymmetries over the cycle and how the commercial and industrial sectors will respond to such changes

product differentiation and the treatment of foreign trade in computable general equilibrium models of small economies this paper examines the treatment of exports and imports and external closure rules adopted in recent single country computable general equilibrium models of small economies the paper presents a simple one sector analytic model which captures the major features of the multi sector counterpart used in applied models the paper derives graphical and algebraic solutions to the model and shows that unlike some earlier external closures this one gives rise to a well behaved price taking economy the model is also useful to illustrate the role of elasticities in popular trade theoretic models that include traded and non traded goods

raiding opportunities and unemployment this article studies the impact of raiding opportunities in a labor market in which worker abilities differ recruiting firms can either raid an elsewhere employed worker of known ability by bidding up his wage or go through costly search to find a good worker among the unemployed in equilibrium all types of workers experience unemployment high ability workers involuntarily the raiding opportunities give rise to involuntary unemployment without changing the basic properties of the competitive model and thus suggest new implications of various institutional parameters on unemployment in particular unemployment compensation minimum wages wage taxation and search requirements

production quota in multiproduct pacific fisheries abstract assessing the individual firm s technology and costs in a multispecies fishery allows design of a more effective output quota prior to regulation by anticipating and controlling for the firm s regulation induced responses an empirical study of a pacific coast trawl fishery indicates that the firm s flexibility of product decision is tightly constrained by its technology and cost structure hence as the resource stock for the regulated species sablefish deteriorates and the trip quota progressively tightens the firm cannot sufficiently reorganize its product bundle to preclude increasingly large sablefish disposal this defeats the purpose of the production quota

how effective are trade barriers an empirical analysis of trade reduction diversion and compression we analyze the effects of trade barriers using highly disaggregated data the level of disaggregation allows us to separate the effects of tariffs and nontariff barriers ntbs into reduction dive

involuntary layoffs in a model with asymmetric information concerning worker ability this paper examines the contract between a risk neutral firm and its risk averse employees assuming that worker ability is privately learned by the firm after a period of employment employers in an external spot labour market attempt to infer worker quality from the observable actions taken by the firm such as the number of workers it lays off the threat of spot market raids distorts the optimal contract layoffs may be involuntary and can exceed efficient levels a seniority layoff rule may be included in the contract to avoid the adverse selection problems that arise if layoffs are conducted on the basis of ability

envisaging feed in tariffs for solar photovoltaic electricity european lessons for canada abstract while it is widely agreed that support schemes need to be put in place to promote the use of renewable electricity there is less consensus as to what are the best kinds of strategies to use what is attracting increasing attention in canada is a system of renewable portfolio standards in this all power suppliers are under an obligation to ensure that a certain percentage of the electricity they generate is from renewable resources they can either generate that electricity themselves or purchase green certificates from those who have used renewables to generate electricity recent experience from europe however suggests that a whole hearted commitment to this single strategy could be premature and potentially damaging for the development of all kinds of renewable electricity in canada solar photovoltaics included on the other side of the atlantic ocean the use of so called feed in tariffs that is an obligation for utilities to purchase at a set price the electricity generated by any renewable energy resource is widely credited with accelerating the development of renewable electricity in many countries the purpose of this article is to reflect upon this european experience with feed in tariffs to stimulate discussions regarding what promise they might hold for the development of solar photovoltaic electricity in canada the article is divided into three main sections in the first section policies to promote renewable electricity presently in place in different parts of canada are reviewed attention is then focused more specifically in the second section of this article upon feed in tariffs after defining and describing this alternative system experiences in the countries of the european union are reviewed the main strengths and weaknesses of feed in tariffs in the european experience are also examined the focus then moves back to canada in the third section of the article in this a system of feed in tariffs is proposed for the province of ontario in order to provide just one example of the kind of support that could be forthcoming

differentiated products and supply controls in the analysis of agricultural policy reform the case of tobacco abstract with a multi market model of the u s tobacco and cigarette industries we analyze the impact of a reduction in the assistance to u s tobacco producers by relaxing production quotas with nonbinding price support and by lowering tariffs on tobacco imports the results show the importance of incorporating differentiated product and supply control assumptions into agricultural policy analysis

assessing the impacts of china s environmental tax using a dynamic computable general equilibrium model abstract since 2018 china has put into practice the new environmental protection tax law which levies taxes on non greenhouse pollutants with stringent standards to fully study the socioeconomic and environmental impacts of this policy this paper establishes a dynamic country level compute general equilibrium cge model with the electricity sector disaggregated into 5 technologies and 19 major taxable pollutants included five scenarios are developed including the baseline scenario bau the low environmental tax scenario lowet the high environmental tax scenario highet the low environmental tax and low carbon tax scenario lowetc and the high environmental tax and high carbon tax scenario highetc the simulation results show that the environmental tax could help reduce emissions of most kinds of pollutants but bring negative effects on the gross domestic product gdp compared to the bau scenario the gdp loss by 2030 would be 0 10 0 21 0 32 and 0 67 in the lowet highet lowetc and highetc scenarios the emission of sulphur dioxide so2 will decrease by 3 55 7 15 6 70 and 13 01 and the emission of carbon dioxide co2 will be reduced by 2 21 4 62 8 91 and 16 77 the result also shows that the heavy polluted sectors and energy intensive sectors will suffer higher output loss while the clean energy sectors and service sector will experience an increase in the output in the policy scenarios

bilateral free trade agreements and customs unions the impact of the eu republic of south africa free trade agreement on botswana the eu has indicated that after 2008 its trade relationships with developing countries will be dominated by the development of preferential trade agreements although not a consequence of the cotonou agreement the free trade agreement between the eu and the republic of south africa eu rsa fta is clearly one of the first fruits of this approach to trade relationships however there is no evidence that the design of the eu rsa fta incorporated a comprehensive general equilibrium evaluation of the agreement for either the signatories or the other southern african nations the analyses reported here indicate that while the eu rsa fta may substantially benefit the signatories there are appreciable negative impacts for other states especially the rsa s immediate neighbours moreover the reluctance of the eu to fully liberalise trade in food and agriculture commodities results in a major reduction in the benefits for the rsa without ameliorating substantively the adverse implications for other nations

the relative inefficiency of quotas the cheese case the nonequivalence of tariffs and quotas under a wide variety of circumstances is well established in economic theory this study considers heterogeneity as a source of nonequivalence and demonstrates its practical importance where restriction is inevitable the bias of economists in favor of price instruments is not thoroughly grounded this study should help provide a foundation the point of departure from the equivalence model is differentiation of products

restricting the market for quota an analysis of tobacco production rights with corroboration from congressional testimony regulatory programs that restrict output levels often impose restrictions on the transfer of rights to produce or to use particular inputs in this paper we use a unique cross section time series data set from north carolina to quantify the welfare effects of transfer restrictions for poundage quota under the u s flue cured tobacco program we find that the deadweight costs of such restrictions are small but that the distributional effects are substantial we analyze congressional testimony on quota transfer legislation and conclude that our estimates of the distributional effects are consistent with expressed views of market participants

the effects of trade liberalisation abstract the liberalisation of agricultural trade has been an important component of the uruguay round of multilateral trade negotiations under the gatt a considerable amount of research effort has been expended on estimating the costs of agricultural protectionism most of this activity has been based on a partial equilibrium framework with conventional quantification of the distributive benefits and costs to be expected from liberalisation attempts at general equilibrium analysis have been fewer but provide evidence of the economy wide gains from the removal of protection whilst these analyses have had a powerful influence on the nature of the political discussions on agricultural trade policy they have not helped define the details of politically acceptable alternatives to current agricultural supports the reasons are the technical economic data and statistical problems which restrict the interpretation of results to broad generalisations and the failure of analyses to focus on the most important political concerns indicating these concerns may help define the focus of future research but it is doubted if conventional economic analysis has very much more to offer

price discrimination and markups in export markets abstract imperfect competition in international markets is one of the key explanations for why prices of similar goods might differ among destination countries this paper develops an empirical model to examine the presence of price discrimination stemming from imperfect competition in the international market for a country s exports the model is used to examine the export behavior of taiwanese exporters of footwear the generalized supply relation allows identification of deviations from competitive pricing in each export market in addition the model provides insights into the extent of exchange rate pass through finally the model is modified in order to estimate the effect of the voluntary export restraint imposed in the u s on footwear imports from taiwan

regional effects of taxes in canada an applied general equilibrium approach this paper reports on an applied general equilibrium regional model for canada which is used to investigate the regional effects of taxes earlier literature on regional tax effects is reviewed and the main features of the model are briefly described existing literature on regional tax effects is largely non quantitative and does not discuss several important regional features of taxes such as taxes which are predominantly on products or industries located in particular regions results suggest that regional effects of taxes can be significant and in the canadian case at least do not tend to counterbalance one another in general richer regions tend to lose and poorer regions gain from federal taxes but other regional characteristics such as manufacturing non manufacturing or resource non resource can be important this abstract was borrowed from another version of this item

excessive labour raiding final version received 24 july 2006 labour raiding refers to rms recruiting and hiring employed workers the literature on labour raidingsupports the idea that raiding sorts workers into their most productive positions i present a model wherean outside rm decides whether or not to pay to learn the match quality of an employed worker and theemployer decides whether or not to pay its worker a high wage that pre empts the raiding i show that theemployer may pay a low wage and gamble that it will not be raided rather than use a pre emptive wage this leads to an excessive amount of raiding

on some properties of a trade closure widely used in numerical modelling abstract armington trade models with price taking behaviour and cet and ces functions may have perverse offer curves and nash equilibria in tariff games may not exist in the two country case

oil price shocks and policy responses in the post reform chinese economy this study analyses the impact of the 1986 oil price shock on china and the policy options for accommodating the shock a computable general equilibrium model is used to capture the complex interactions in the chinese economy in response to the shock interpreted in the theoretical framework of the booming sector model the results of the model provide insights on both the real and monetary effects of the shock and suggest that a combination of policy instruments such as a cut in real absorption depreciation of the official exchange rate and tight monetary control are required to facilitate adjustment

seasonal rural labor markets and their relevance to policy analyses in developing countries abstract seasonality is a salient feature of rural livelihoods and particularly within agriculture the demand for labor varies with the seasons and weather in low income countries agriculture employs almost two thirds of the labor force and incomes from labor are a major determinant of welfare therefore an appropriate model representation of rural labor markets is critical when analyzing agricultural and food policies economy wide models are commonly used for ex ante policy analysis but have so far ignored the influence of seasonality implicitly assuming separability of seasonal labor demand and supply this study relaxes that assumption using a computable general equilibrium cge model calibrated to the bhutanese economy as an illustrative case using model setups with and without seasonal labor markets a cereal export ban of india is simulated leading to higher import prices for bhutan results demonstrate that neglecting the influence of seasons on rural labor markets systematically biases model results assuming homogeneity of labor units i e allowing substitution across seasons understates the impacts of policy changes on rural wage rates distorts households labor leisure trade off decisions and overstates agricultural supply response given the widespread use of economy wide models the results are important for understanding the implications of domestic and global policy changes for agriculture and welfare in developing economies

trade democracy and the gravity equation abstract does democracy affect trade there are several channels by which democracy may affect trade with differing implications first democratization in the exporting country can improve product quality and reduce trade costs increasing bilateral trade second democratization in the importing country may increase trade barriers and thus reduce imports in this paper i analyze the effect of democracy on trade by augmenting the gravity equation with democracy using a rich panel data set and controlling for the endogeneity of democracy i find empirical evidence consistent with the hypothesis that democracy fosters trade this finding is robust to various econometric methods and to the use of disaggregated specifications

export supply capacity and relative prices in the neoclassical approach to specifying an export supply equation relative prices and capacity are assumed to play a crucial role in domestic firms decisions to supply exports in the keynesian approach the willingness of domestic firms to supply foreign markets is considered to be largely a function of domestic demand pressure keynesian analyses do not allow for the impact of relative prices this paper blends the two approaches in a model in which a firm is assumed to choose first the level of productive capacity and then one period later to determine production and allocation between foreign and domestic markets on the basis of realized prices demand conditions and installed capacity the conclusion both prices and capacity are significant determinants of export supply

quantifying the impact of services liberalization in a developing country the authors consider how service liberalization differs from goods liberalization in terms of welfare the level and composition of output and factor prices within a developing economy in this case tunisia despite recent movements toward liberalization tunisian service sectors remain largely closed to foreign participation and are provided at high cost relative to many developing nations the authors develop a computable general equilibrium cge model of the tunisian economy with multiple products and services and three trading partners they model goods liberalization as the unilateral removal of product tariffs restraints on services trade involve both restrictions on cross border supply mode 1 in the gats and on foreign ownership through foreign direct investment mode 3 in the gats the former are modeled as tariff equivalent price wedges while the latter are comprised of both monopoly rent distortions arising from imperfect competition among domestic producers and inefficiency costs arising from a failure of domestic service providers to adopt least cost practices they find that goods trade liberalization yields a gain in aggregate welfare and reorients production toward sectors of benchmark comparative advantage however a reduction of services barriers in a way that permits greater competition through foreign direct investment generates larger welfare gains service liberalization also requires lower adjustment costs measured in terms of sectoral movement of workers than does goods trade liberalization and it tends to increase economic activity in all sectors and raise the real returns to both capital and labor the overall welfare gains of comprehensive service liberalization amount to more than 5 percent of initial consumption the bulk of these gains come from opening markets for finance business services and telecommunications because these are key inputs into all sectors of the economy their liberalization cuts costs and drives larger efficiency gains overall the results point to the potential importance of deregulating services provision for economic development

does the central american common marke1 benefit its members does the central american common market benefit its members i introduction the members of the central american common market cacm have recently taken measures to revitalize their union they have formally pledged to improve regional economic integration and they have reinforced the common external tariff they took these measures in the belief that a stronger union would improve their economic welfare a belief that has also led both the united states and the european community to support a stronger union the idea that a regional trading group would improve economic welfare of the central american countries originated in the early 1950s when raul prebisch and other economists in the united nations economic commission for latin america ecla argued persuasively that such a union would help these countries develop their economies to many the views of the ecla economists were vindicated when the inceptionof the cacm in 1960 was followed shortly by accelerated economic growth in the region further support for their views came from quantitative studies cline and delgado 1978 willmore 1976 yotopoulos and nugent 1976 nugent 1974 and wilford 1970 which all concluded that the union provides static welfare gains for its members there is however room for skepticism about the benefits of the cacm much of the argument of the ecla economists is based on the notion that import substitution is a good way to promote economic development a notion that has since fallen into disrepute nor does the accelerated growth that followed the union s formation provide strong evidence that the cacm provides benefits the volume of trade between members is too small for the union to have had more than a minor effect on the region s economy so even if this effect were negative the region would presumably still have grown rapidly in the mid 1960s the evidence from the quantitative studies is also faulty these studies did not estimate directly the effects of the cacm but merely imputed these effects by assuming either that market shares or income elasticities would have remained constant without the union furthermore they assumed that supplies of different countries are perfect substitutes for each other whereas recent studies by collier 1979 grossman 1982 and anderson 1985 have shown that the degree of substitutability in demand between these supplies is important in determining how customs unions and other discriminatory tariff changes affect welfare it is particularly important to allow for less than perfect substitutability when analyzing the cacm because member imports from developed countries often have no close substitutes among locally produced goods in this paper the static welfare consequences of the cacm are reexamined with two important advances over the previous studies first direct estimates are made of the effects of the union second the shortcomings of the perfect substitutes assumption are overcome by allowing imports from different countries to be imperfect substitutes for each other and for domestic output the model which is partial equilibrium in nature also enjoys two advantages over the computable general equilibrium models such as those whalley 1985 and hamilton and whalley 1985 used to examine the effects of various economic integration schemes it requires fewer data and its operation is more transparent so it shows more clearly how introducing imperfect substitutes alters the traditional analysis of a customs union the model s main limitation is that it applies only to customs unions among small countries ii the model geometric presentation figures 1 2 and 3 show the home market and figure 4 the export market for country a a representative member of the cacm a s residents distinguish between four goods imports from other members imports from nonmembers domestic output for home consumption and exports

reference point dependence and specification bias abstract issues of specification bias arise in deterministic as well as in econometric models this paper shows that such biases depend on the reference point used to evaluate them using numerical general equilibrium models in which the incorporation of quality upgrading in the competitive case increases or reduces the welfare costs of trade barriers depending upon whether a trade distorted equilibrium or free trade is used as the reference point

external shocks purchasing power parity and the equilibrium real exchange rate two approaches are commonly used to determine the equilibrium real exchange rate in a country after external shocks purchasing power parity ppp calculations and the salter swan tradables nontradables model there are theoretical and empirical problems with both approaches and tensions between them in this article the authors resolve these theoretical and empirical difficulties by presenting a model which is a generalization of the salter swan model and which incorporates imperfect substitutes for both imports and exports within the framework of this model the definition of the real exchange rate is consistent both with that of the ppp approach and with that of the salter swan model suitably extended the model however is capable of capturing a richer set of phenomena including terms of trade shocks and changes in foreign capital inflows it also provides a practical way to estimate changes in the equilibrium real exchange rate requiring little more information than is required to do ppp calculations the results are consistent with those of multisector computable general equilibrum models which generalize the trade specification of the small model

quotas as options quota licenses are options their price is given by expected discounted future value which hangs on the possibility that the quota may bind a number of auxiliary administrative details of quota systems are also analyzed in this context the presence of use it or lose it requirements and of restrictions on rate of usage of the annual quota can be seen as attempts to offset the implied protection on below limit imports they are shown to be inefficient recognition of the option valuation of quota licenses is rich with suggestions for future work on evaluation of quotas and comparisons with alternative schemes for protection

external sector closing rules in applied general equilibrium models abstract this paper examines formulations of external sector behavior adopted in some of the recent applied general equilibrium models in many cases these models are constructed for single economies and the model builder attempts to use a convenient external sector specification to close the model issues and difficulties with export demand and import supply functions for foreigners which satisfy trade balance and the modeling of small economy price taking behavior are explored

global models of trade in agriculture and related environmental modelling a review and assessment the continuing process of global integration bears implications for farmers and related supplying and processing industries in all parts of the world but also for the rest of the world economy an assessment of agricultural and trade policy impacts is bound to be complex and is often supported by quantitative modeling analysis this article provides an assessment of the present state of applied modelling in the area of trade and agricultural policies we provide in this paper a comparative assessment of alternative modelling approaches considering a total of 16 partial equilibrium and general equilibrium models the assessment includes theoretical modelling foundations datasets employed and institutional aspects such as model maintenance and dissemination of results a typology of models is provided by structuring the assessment along a clear set of evaluation criteria

taxes and the quality of capital abstract this paper shows that tax policy toward investment by changing the relative prices of capital varieties even within narrow classes of equipment can have a direct effect on the quality composition of capital goods that firms purchase detailed data on farming mining and construction machinery suggest that this impact is economically important firms significantly shift investment toward higher quality varieties when they receive investment subsidies and do not do so when investment is high for other reasons in the aggregate all of the new investment generated by tax subsidies appears to come from firms shifting to higher quality capital goods rather than buying a larger number of their existing capital types the paper also applies a methodology for calculating the implied deadweight loss from the quality distortion and shows that its magnitude may represent a substantial efficiency cost from capital taxation that is neglected in conventional work

economic issues in tariffication an overview abstract the agricultural trade liberalization proposal known as tariffication aims at converting all existing non tariff barriers ntbs to trade into bound tariffs and to reduce these tariffs over time this is in tune with the original philosophy of the general agreement on tariffs and trade gatt and it calls for a dramatic overhaul of existing agricultural policies in many developed countries the main economic issues that arise with tariffication stem from the non equivalence of tariffs and ntbs in a number of scenarios this paper analyzes non equivalence arising from the existence of imperfect competition in importing countries price instability in importing and exporting countries and inefficient allocation of quantitative restrictions it is shown that in all these cases the definition of an appropriate equivalent tariff to be used in tariffication is not straightforward and that in general this equivalent tariff cannot be computed on the basis of only observed price differences between countries tariff rate quotas which are meant to be the main tool of implementation of tariffication according to the existing proposal are analyzed in some detail concerning the relationship between tariffication and the other elements of the trade liberalization package it is shown that tariffication would limit the scope of export subsidy policies it is also shown that the existence of production and export subsidies makes observed price gaps between countries of questionable value in setting equivalent tariff levels finally it is argued that the main focus of tariffication should be the conversion of ntbs to acceptable long run bound tariffs rates and considerable flexibility in this conversion process could be exercised in the transition period