Welfare Impact of Trade Liberalization

Sang-Wook Cho () and Julian Diaz

No 2008-20, Discussion Papers from School of Economics, The University of New South Wales

Abstract: This paper constructs a static Applied General Equilibrium Model and analyzes the distributional impact of trade reforms. To calibrate our model, we work with the Household Expenditure Survey to disaggregate household groups by income, age, and skill intensity, and the Input-Output table to construct a Social Accounting Matrix. Our benchmark simulation looks at Slovenia joining the European Union. We then compare with two alternative scenarios: a free trade agreement between Slovenia and the EU, and an alternative fiscal arrangement of distributing tariff revenues under the EU. While trade reforms lead to falling prices in the import sector, rising production in the export sector, and improvement in aggregate welfare, the distributional impacts across household groups vary in its degree.

Keywords: Trade Liberalization; Free Trade Agreement; Customs Union; Social Accounting Matrix; Household welfare (search for similar items in EconPapers)
JEL-codes: D58 F14 F15 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2008-10
New Economics Papers: this item is included in nep-int
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http://wwwdocs.fce.unsw.edu.au/economics/Research/WorkingPapers/2008_20.pdf (application/pdf)

Related works:
Journal Article: THE WELFARE IMPACT OF TRADE LIBERALIZATION (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:swe:wpaper:2008-20

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