Trade liberalisation and inequalities in Nepal: A CGE analysis

Sanjaya Acharya, Jens Hölscher and Cristiano Perugini

Economic Modelling, 2012, vol. 29, issue 6, 2543-2557

Abstract: In this paper we examine the effects of trade liberalisation on inequality in the small developing country of Nepal. We use a Computable General Equilibrium approach applied to a newly developed social accounting matrix, simulating three liberalisation scenarios: (i) import liberalisation; (ii) export liberalisation; and (iii) import and export liberalisations implemented together under different exchange rate regimes. Outcomes reveal that industry reallocation following liberalisation does not respond to classical trade theory expectations about factor intensity and abundance. On the distributive side, liberalisation seems to increase the high-skilled/low-skilled gap and favour rich households relatively more. However, since under fixed exchange rate also the two poorest household groups increase their income levels, liberalisation may also expected to be beneficial for poverty alleviation.

Keywords: Trade liberalisation; Inequality; CGE model; Nepal (search for similar items in EconPapers)
JEL-codes: D33 D58 F15 N75 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:29:y:2012:i:6:p:2543-2557

DOI: 10.1016/j.econmod.2012.08.008

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