Anticipated trade policy: New insights from an intertemporal general equilibrium model for Egypt

Abeer Elshennawy

Economic Modelling, 2025, vol. 146, issue C

Abstract: Utilizing a multisector intertemporal general equilibrium model calibrated to data for Egypt, this study explores the nature of the transitional paths of the economy in response to anticipated and unanticipated trade policy reforms. In general, preannouncement of trade policy is advocated for reducing adjustment costs to trade liberalization. However, this study demonstrates that the preannouncement of a future tariff cut generates welfare losses. Such trade-offs must be considered when designing a trade reform. This study also provides a systematic analysis of the results’ sensitivity to assumptions about the size order of capital stock adjustment costs and the length of the lag between the announcement and implementation of the trade policy reform.

Keywords: Trade liberalization; Intertemporal computable general equilibrium; Immiserizing growth; Dynamic CGE analysis; Adjustment costs; Announcement effect (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:146:y:2025:i:c:s0264999325000239

DOI: 10.1016/j.econmod.2025.107028

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