economy in 1985. Given that one of the trade policy options that we seek to evaluate<sup>is protection uniformity, we</sup> were anxious not to bias results by aggregating the model excessively.<sup>8</sup> Table<sup>I displays the names of each of our</sup> sectors along with a 3-letter acronym for later reference.

In Table 1 we also list each of the tax instrumenis in the Turkish model. Domestic<sup>taxes consist of the value</sup> added tax (VAT) and production subsidies.<sup>9</sup> Foreign trade taxes consist of import<sup>tariffs and export subsidies. The</sup> most important instruments from a revenue perspective are tariffs and the VAT. There<sup>are no import quotas or</sup> voluntary export restraints (VER's) in the Turkey model, reflecting their virtual absence<sup>from the economy in 1989,</sup> the benchmark year for the tax and trade policies.

Using benchmark import and export shares as weights the average import tariff in the model is 8.115% and the average export subsidy 7.399%. These values are substantially lower than prevailed<sup>throughout the earlier</sup> part of the 1980's. Nonetheless, there is still considerable dispersion in these rates<sup>across sectors, which turns out</sup> to be crucial for our welfare evaluation of their distortionary effects.<sup>0</sup> The benchmark values of all elasticities in the model are reported in an appendix. Virtually<sup>all of the values</sup> have been selected from literature searches.<sup>1</sup> 'Tere are many elasticities that<sup>must be specified here that we do</sup> not have (good) data on. Our remedy for this problem, which is endemic to any<sup>large-scale model of this kind,</sup> s By aggregating even further (at least according to the criteria of value-added)<sup>we would tend to bias the model towards showing</sup> smaller welfare benefits from uniformity, since benchmark tariffs would be more<sup>uniform in the benchmark equilibrium solelyasan artifawt</sup> of the process of aggregation. One alternative to employing a disaggregated<sup>model such as ours, which would reduce aggregation bias, is to</sup> use an explicit decision-theoretic metric in selecting sectors to be aggregated,<sup>such as advocated by Harrison and Manning 119871. This</sup> would involve aggregating tectors with similar levels of protection. Given that the current state<sup>of modelling technology does not constrain</sup> us to aggregate significantly, we elect not **to.** 9 The VAT rstes listed in Table I show a great deal of variation across sectors.<sup>Patt of the reason is there is some slight statutory</sup> difference in the rates. More important, however, is that our rates are derived from<sup>observed collections in</sup><sup>_1985._the year the VAT</sup><sup>**was**</sup> barely introduced. Ther were a great many administrative difficulties<sup>in collection procedures, yielding differmnt observed collection rates.</sup> Further claboration is provided in appendix B.

**t°** Moreover, just nine sectors account for 79% of the total tariff revenue: CHM (20.7%), ELM (7.3 _%),_ IRN<sup>(4.2%). MAC</sup><sup>**(13.4%),**</sup> OMI (5.2%), REF (6.1 _%),_ TEX (4.5 %), TOB _(3._ S%) and VEH (14.1 _%)._

II The elasticity of transformation is set at 2.9 in all sectors and is based on estimates by Faini I19881; it has<sup>a standard error of 1.3 in</sup> our sensitivity analyses. The primary factor substitution clasticities are based<sup>on the regression estimates of Harrison, Jones, Kimbell and</sup> wrigle (19911, and have standard errors -s reported ther. They range between 0.293 for refined<sup>petrolcum products (REF) up to 3.125 for</sup> restaurants and hotels (RES), but the Sf-. majority are close<sup>to unity. The elasticity of substitution between domestic and imported goods is</sup> based on detailed estimates from the ORANI model of Australia reported<sup>in Dixon, Pamenter, Sutton and Vincent (19821 There do exist</sup> some estimates on these elasticities for Turkey, reported in Grais, de Mclo and Urats (1986; Table<sup>_5,_p.7S1, but these were not sufficiently</sup> disaggregated for our purposes. The import-source substitution elasticities<sup>are set at S on the basis of our priors. Sinilarly, the price</sup> elasticity of the Armnington aggregate is likewise set at 2 on the basis<sup>of our priors. In addition there is an elasticity of substitution between</sup> intcrmediate inputs and value-added in each sector. The tradition, no doubt borne<sup>of Input-Output nodelling habits, is to set this elsticity at</sup> zero. We do likewise, but also consider values of 0.25, 0.5, 0.75 and<sup>I (for each sector) in our sensitivity analysis. Apart from these scctor-</sup> specific elasticities. there is one further elasticity reflecting substitutability<sup>of consumption in the'top-level'of our consuners utility</sup> function. We assumc a value of I in this instance, again rflecting our priorn and little hard<sup>evidence.</sup>

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