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The impact of trade liberalisation on poverty and inequality: Evidence from CGE models

Edward Anderson

Journal of Policy Modeling, 2020, vol. 42, issue 6, 1208-1227

Abstract: In this paper we carry out a systematic review of the evidence from CGE models regarding the effect of trade liberalisation on income inequality and poverty in developing countries. The evidence suggests quite strongly that trade liberalisation tends to reduce poverty, but is more likely to increase inequality than reduce it; however, the predicted effects are relatively small. Variation in the size and direction of effects can be explained by the choice of outcome measure, the fiscal response to liberalisation, the type of CGE model, and certain country characteristics – but not the method used to link the CGE model to the distribution of income.

Keywords: Trade liberalisation; CGE models; Poverty; Inequality (search for similar items in EconPapers)
JEL-codes: D58 D63 F13 F60 I38 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.jpolmod.2020.05.006

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