An Intervention Analysis of a Trade Policy

Deergha Raj Adhikari (dradhikari@yahoo.com)
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Deergha Raj Adhikari: University of Louisiana, Economics and Finance, Lafayette, Louisiana, USA, Postal: 710 E Saint Mary Blvd, Lafayette, LA 70503-2332, USA, http://www.louisiana.edu/

Economia Internazionale / International Economics, 2006, vol. 59, issue 3, 277-284

Abstract: We Develop An Intervention Model Based On Ju And Krishna’s Suffi Cient Condition For A Trade Reform Policy To Be Welfare Improving. The Welfare Improving Condition Requires That The Mean Value Of Net Imports Of A Country Evaluated At Post-Intervention Prices Be Higher Than That Before The Intervention. To Compare The Two Mean Values We Introduce An Intervention Dummy In The Model. We Apply This Model To Evaluate The Impact Of NAFTA On Mexican Welfare. Our Study Fi Nds That The Intervention Dummy Is Negative, But Insignifi Cant. This Result Fails To Meet The Suffi Cient Condition For Welfare Improvement. Consequently, We Do Not Reject The Hypotheses That Mexican Welfare Has Not Changed (Increased Or Decreased) Due To NAFTA.

Keywords: NAFTA; Revealed-Preference; Trade-Reform; Welfare; Intervention-Analysis (search for similar items in EconPapers)
JEL-codes: F10 (search for similar items in EconPapers)
Date: 2006
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