Proposal for the Reduction of Domestic Price Variability During the Phase-In Period of Trade Liberalization (A)

Dermot Hayes, Thomas Wahl and Stanley R. Johnson

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Countries replacing existing trade barriers with a fixed tariff may find that domestic price variability rises to politically unacceptable levels. This paper shows how the tariff-reduction formula can be modified to delay the transmission of world price variability. The importance of this modification is demonstrated by a simple two-country, one-commodity simulation model. The simulation results show that tariffication of existing EC variable levies/export subsidies would dramatically increase price variability within the European Community and that the transmission of this variability can be delayed by slightly altering the adjustment formula.

Date: 1992-01-01
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Published in Agricultural Economics, June 1992, vol. 7 no. 1, pp. 55-64

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Journal Article: A proposal for the reduction of domestic price variability during the phase‐in period of trade liberalization (1992)
Journal Article: A proposal for the reduction of domestic price variability during the phase-in period of trade liberalization (1992)
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