The impact of tariff reduction on Bangladesh economy: a computable general equilibrium assessment

Serajul Hoque

MPRA Paper from University Library of Munich, Germany

Abstract: This paper explores the effects of tariff reduction on macroeconomic indicators and sectoral output in Bangladesh using a computable general equilibrium approach. The simulation results indicate that a reduction in all tariffs expands gross domestic product and generates employment, which suggests that tariff cuts have a short-run stimulatory effect on economic growth. The industries that experience the greatest positive effects on their output and employment are export-oriented industries. There are also positive effects on the suppliers to these industries. Lightly-protected industries that rely heavily on imported intermediate inputs exhibit robust expansion, benefiting from a cost reduction as a result of the removal of protection. However, highly-protected, import-competing industries suffer a contraction in output and employment as they face increased competition from imports due to the liberalisation of trade.

Keywords: Trade liberalisation; computable general equilibrium model; Bangladesh (search for similar items in EconPapers)
JEL-codes: C68 F13 (search for similar items in EconPapers)
Date: 2005-05
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:16246

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