The Macroeconomic, Industrial and Distributional Effects of Removing Tariffs in Bangladesh

Serajul Hoque

Centre of Policy Studies/IMPACT Centre Working Papers from Victoria University, Centre of Policy Studies/IMPACT Centre

Abstract: This paper examines the economic effects of removing tariffs in Bangladesh using a computable general equilibrium (CGE) modelling approach. The results of the simulations indicate that in the short-run a funded tariff cut with fixed real national savings would increase employment slightly and hence would expand GDP. There would be a small economy-wide welfare gain as measured by real consumption. The sectoral results showed that export-oriented industries would experience an expansion in output and employment. There also would be positive effects on the suppliers to these industries. Lightly-protected industries, which rely heavily on imported intermediate inputs, are projected to show robust expansion as they would benefit from a cost reduction. However, highly-protected, import-competing industries would suffer a contraction in output and employment as they would face increased competition from imports due to the removal of tariffs. The simulation results also indicate that there would have some noticeable effects on the distribution of real consumption between different household groups. Overall, urban households would experience an expansion in real consumption and rural households would suffer a contraction as a consequence of the funded tariff cut with fixed real national savings.

Keywords: CGE model; trade liberalisation; income distribution; Bangladesh (search for similar items in EconPapers)
JEL-codes: C68 F13 O15 (search for similar items in EconPapers)
Date: 2008-01
New Economics Papers: this item is included in nep-cmp, nep-cwa, nep-dev, nep-int and nep-mac
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The macroeconomic, industrial and distributional effects of removing tariffs in Bangladesh (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cop:wpaper:g-170

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