Anti-trade Bias in Trade Policy and General Equilibrium

2004 ◽  
Vol 3 (1) ◽  
Author(s):  
Nuno Limao ◽  
Arvind Panagariya
Keyword(s):  
Political Economy ◽  
General Equilibrium ◽  
Equilibrium Model ◽  
Elasticity Of Substitution ◽  
Partial Equilibrium ◽  
Ceteris Paribus ◽  
Economy Model ◽  
Partial Equilibrium Model ◽  
Ambiguous Effect ◽  
Trade Interventions

Abstract An important question that has continued to elude trade economists is why trade interventions are biased in favor of import-competing rather than exportable sectors. Indeed, as Philip Levy (1999) points out, under a set of neutrality assumptions, the dominant political-economy model, Grossman and Helpman (1994), predicts a pro-trade bias. We demonstrate that if we replace the almost partial equilibrium model with a general equilibrium model in the Grossman-Helpman political economy model, anti-trade bias may emerge even if we assume symmetric technologies, endowments and preferences across sectors provided that the elasticity of substitution in production exceeds unity. In addition, we show that ceteris paribus, in general equilibrium, increases in the imports-to-GDP ratio lower the endogenously chosen tariff and the production share of the import sector in GDP has an ambiguous effect.

Effects of Cooking Oil Subsidy Removals on Related Markets in Malaysia: A Comparative Static, Multicommodity, Multi Stage Production Approach

2011 ◽  
Author(s):  
Jamal Othman ◽  
Yaghoob Jafari
Keyword(s):  
Equilibrium Model ◽  
Comparative Statics ◽  
Partial Equilibrium ◽  
Cooking Oil ◽  
Multi Stage ◽  
Supply Factor ◽  
Partial Equilibrium Model ◽  
Factor Markets ◽  
Input Markets ◽  
Production Approach

Malaysia is contemplating removal of most of her subsidy support measures including subsidies on cooking oil which is largely palm oil based. This paper aims to examine the effects of cooking oil subsidy removals on the competitiveness of the oil palm subsector and related markets. This is done by developing and applying a comparative static, multi-commodity, partial equilibrium model with multi-stages of production function for the Malaysian perennial crops subsector which explicitly links different stages of production, primary and intermediate input markets, trade, and policy linkages. Results partly suggest that export of cooking oil will increase by 0.2 per cent due to a 10 per cent cooking oil subsidy reduction, while domestic output of cooking oil may eventually see a net decline of 1.97 per cent. The results clearly point out that the effect of reducing cooking oil subsidies is relatively small at the upstream levels and therefore it only induces minute effects on factor markets. Consequently, the market for other agricultural crops is projected to change very marginally.   Keywords: Multicomodity, comparative statics, partial equilibrium model, output supply-factor markets linkages, effects of cooking oil subsidy removals.

Comments on "Shadow Pricing and Macroeconomic Analysis: Some Illustrations from Pakistan" by Squire et al.

1979 ◽  
Vol 18 (2) ◽  
pp. 113-115
Author(s):  
T. N. Srinivasan
Keyword(s):  
General Equilibrium ◽  
Equilibrium Model ◽  
General Equilibrium Model ◽  
Equilibrium Analysis ◽  
Partial Equilibrium ◽  
Shadow Prices ◽  
Essential Point ◽  
Economic Issues ◽  
Shadow Pricing ◽  
Extreme Sensitivity

The paper is too long for conveying the message that shadow pricing used as a method of analysis in micro-economic issues of project selection is also useful for analysing macro-economic issues, such as foreign and domestic borrowing by the government, emigration, etc. Much of the methodological discussion in the paper is available in a readily accessible form in several publications of each of the coauthors; In contrast, the specific application of the methodology to Pakistani problems is much too cavalier. While it is hard to disagree with the authors' claim that shadow pricing "constitutes a relatively informal attempt to capture general equilibrium effects" (p. 89, emphasis added), their depiction of traditional analysis is a bit of a caricature: essentially it sets up a strawman to knock down. After all in the traditional partial equilibrium analysis, the caveat is always entered that the results are possibly sensitive to violation of the ceteris paribus assumptions of the analysis, though often the analysts will claim that extreme sensitivity is unlikely. Analogously, the shadow pricing method presumes "stationarity" of shadow prices in the sense that they are “independent of policy changes under review" (p. 90). The essential point to be noted is that the validity of this assertion or of the "not too extreme sensitivity" assertion of partial equilibrium analysts can be tested only with a full scale general equilibrium model! At any rate this reviewer would not pose the issue as one of traditional partial equilibrium macro-analysis versus shadow pricing as an approximate general equilibrium analysis, but would prefer a description of project analysis as an approach in which a macro-general equilibrium model of a manageable size (implicit or explicit) is used to derive a set of key shadow prices which are then used in a detailed micro-analysis of projects.

scholarly journals Modelling the Impact of Energy Subsidies Reform in the Republic of Moldova

Economica ◽  
2021 ◽  
Author(s):  
Mihail Roscovan ◽  
Keyword(s):  
Natural Gas ◽  
Greenhouse Gas ◽  
Equilibrium Model ◽  
Value Added ◽  
Partial Equilibrium ◽  
Energy Subsidies ◽  
Republic Of Moldova ◽  
Partial Equilibrium Model ◽  
The Republic ◽  
The Impact

This article presents the methodology and results of modelling for the analysis on energy affordability and assessing the impact of a possible value added tax increase on the affordability of households to consume adequate levels of natural gas, electricity and heat. The analysis of the reform impact of the subsidy schemes is based on a partial equilibrium model which measures the impact of reforms on energy affordability of different householder groups and budgetary revenue and expenditure, but also on greenhouse gas emissions. Using of targeted social policies generates a budget surplus that can be allocated to energy

scholarly journals The meat market in Brazil: a partial equilibrium model

2008 ◽  
Vol 46 (4) ◽  
pp. 1189-1208 ◽  
Author(s):  
Geraldo da Silva e Souza ◽  
Eliseu Alves ◽  
Rosaura Gazzola ◽  
Renner Marra
Keyword(s):  
Least Squares ◽  
Equilibrium Model ◽  
Relative Increase ◽  
Partial Equilibrium ◽  
Model Simulations ◽  
Partial Equilibrium Model ◽  
Three Stages ◽  
Near Future ◽  
Meat Market

A partial equilibrium model for the meat market is fit to Brazilian data by three stages least squares. The model is consistent with the data and may be used for simulation purposes. In this context we compare model simulations for the near future with the OECD/ Aglink outlook. To illustrate using the model for simulations in policy assessments, we investigate the effect of a relative increase in corn price on the poultry and pork markets, coeteris paribus.

scholarly journals The Case Against Patents

2013 ◽  
Vol 27 (1) ◽  
pp. 3-22 ◽  
Author(s):  
Michele Boldrin ◽  
David K Levine
Keyword(s):  
Political Economy ◽  
General Equilibrium ◽  
Empirical Evidence ◽  
Policy Change ◽  
Rent Seeking ◽  
Partial Equilibrium ◽  
The Political ◽  
General Equilibrium Effect ◽  
Equilibrium Effect ◽  
Over Time

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless productivity is identified with the number of patents awarded—which, as evidence shows, has no correlation with measured productivity. Both theory and evidence suggest that while patents can have a partial equilibrium effect of improving incentives to invent, the general equilibrium effect on innovation can be negative. A properly designed patent system might serve to increase innovation at a certain time and place. Unfortunately, the political economy of government-operated patent systems indicates that such systems are susceptible to pressures that cause the ill effects of patents to grow over time. Our preferred policy solution is to abolish patents entirely and to find other legislative instruments, less open to lobbying and rent seeking, to foster innovation when there is clear evidence that laissez-faire undersupplies it. However, if that policy change seems too large to swallow, we discuss in the conclusion a set of partial reforms that could be implemented

scholarly journals Unemployment, Factor Substitution and Capital Formation

2003 ◽  
Vol 4 (4) ◽  
pp. 475-495 ◽  
Author(s):  
Leo Kaas ◽  
Leopold von Thadden
Keyword(s):  
General Equilibrium ◽  
Equilibrium Model ◽  
Capital Formation ◽  
Wage Bargaining ◽  
Elasticity Of Substitution ◽  
Wage Setting ◽  
Dynamic General Equilibrium Model ◽  
Long Run ◽  
Factor Substitution ◽  
Adjustment Dynamics

Abstract We incorporate a wage-bargaining structure in a dynamic general equilibrium model and show how this feature changes short- and long-run properties of equilibria compared with a perfectly competitive setting.We discuss how employment, capital and income shares respond to wage-setting shocks and show that adjustment dynamics depend decisively on the magnitude of the elasticity of substitution between labour and capital. Values of the elasticity below unity add persistence, tend to preserve stability and lead to empirically plausible adjustment patterns. By contrast, values above unity introduce additional volatility, thereby making steady states potentially unstable.

Sign in / Sign up

Export Citation Format

Share Document