TRADE ADJUSTMENT POLICIES AND INCOME DISTRIBUTION IN THREE ARCHETYPE DEVELOPING ECONOMIES

Jaime de Melo and Sherman Robinson

Chapter 10 in Modeling Developing Countries' Policies in General Equilibrium, 2015, pp 217-242 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This paper explores quantitatively the macroeconomic and distributional impacts on non-oil producing, semi-industrial developing countries of external shocks originating in the world economy—in particular, rising costs of imports and shrinking export markets. The empirical analysis is done with a computable general equilibrium (CGE) model. The effects of the same external shock are modelled for three different archetype economies: a primary exporter, a manufacturing exporter, and a closed economy. Three different policy-adjustment regimes are considered: devaluation, premium rationing of imports (import licenses), and premium rationing in an environment with a fixed real wage for unskilled labor. By making simple assumptions about the way socioeconomic groups operate to influence decision-making, the paper also examines how the struggle between the gainers and losers is likely to affect the policy regime to be chosen.

Keywords: Applied General Equilibrium Models; Trade Policy; Computable General Equilibrium; Archetypes (search for similar items in EconPapers)
Date: 2015
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Journal Article: Trade adjustment policies and income distribution in three archetype developing economies (1982)
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