Trade Reform and Household Welfare : The Case of Mexico

Trade Reform and Household Welfare : The Case of Mexico

The authors use a two-step, computationally simple procedure to analyze the effects of Mexico's potentially unilateral tariff liberalization. First, they use a computable general equilibrium model provided by the Global Trade Analysis Project...

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Bibliographic Details
Main Authors:	Ianchovichina, Elena, Nicita, Alessandro, Soloaga, Isidro
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ABATEMENT ADJUSTMENT COSTS ADJUSTMENT POLICIES ADJUSTMENT PROGRAMS AGGREGATE INCOME AGGREGATE LEVEL AGRICULTURAL ECONOMICS AGRICULTURE AVERAGE INCOME CAPITAL CIVIL SOCIETY COMMODITIES CONSUMERS CONSUMPTION LEVELS DATA SET DECOMPOSABLE POVERTY MEASURES DESCRIPTIVE STATISTICS DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISTRIBUTIONAL EFFECTS DISTRIBUTIONAL IMPACT DOMESTIC DEMAND ECONOMIC COOPERATION ECONOMIC GROWTH ECONOMIC REVIEW ECONOMIC TRENDS ELASTICITIES ELASTICITY OF DEMAND EMPLOYMENT EQUILIBRIUM EQUIVALENT VARIATION EXPENDITURE DATA EXPENDITURE GROUPS EXPENDITURE SURVEY EXPENDITURES EXTREME POVERTY FACTOR INCOME FINANCIAL CRISIS FISCAL POLICIES FOOD BASKET FOOD CONSUMPTION FREE TRADE FULL EMPLOYMENT GAIN GENERAL EQUILIBRIUM ANALYSIS GENERAL EQUILIBRIUM MODEL GINI COEFFICIENT GLOBAL TRADE GOVERNMENT EXPENDITURES HEADCOUNT INDEX HEADCOUNT RATIO HOUSEHOLD CHARACTERISTICS HOUSEHOLD CONSUMPTION HOUSEHOLD DATA HOUSEHOLD EXPENDITURES HOUSEHOLD INCOME HOUSEHOLD LEVEL HOUSEHOLD MEMBERS HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HOUSEHOLD WELFARE INCOME INCOME DISTRIBUTION INCOME EFFECT INCOME ELASTICITY INCOME ELASTICITY OF DEMAND INCOME GROUPS INCOME SCALE INCOME SOURCES INCREASED RETURNS INDIVIDUAL LEVEL INEQUALITY INEQUALITY INDICATORS INEQUALITY MEASURES INFLATION INFORMAL SECTOR INTEREST RATE LABOR MARKETS LIVING CONDITIONS LIVING STANDARD LIVING STANDARDS LONG-TERM TRENDS LOW INCOME MACROECONOMIC FRAMEWORK MACROECONOMIC POLICIES MACROECONOMIC SHOCKS MANUFACTURING SECTOR MINIMUM LEVEL NATIONAL LEVEL NATURAL RESOURCES NET IMPACT OPPORTUNITY COST PER CAPITA CONSUMPTION PER CAPITA INCOME PER-CAPITA INCOME POLICY CHANGES POLICY REFORMS POLICY RESEARCH POOR HOUSEHOLDS POOR INDIVIDUALS POPULATION SUB-GROUPS POSITIVE EFFECT POVERTY ALLEVIATION POVERTY ASSESSMENT POVERTY ASSESSMENTS POVERTY GAP POVERTY INDEXES POVERTY INDICATORS POVERTY ISSUES POVERTY LEVELS POVERTY LINE POVERTY LINES POVERTY MEASURES POVERTY REDUCTION POVERTY REDUCTION STRATEGY PRICE CHANGES PRICE ELASTICITIES PRICE INDEXES PRICE VARIATIONS PRODUCERS PUBLIC GOODS PUBLIC SECTOR PURCHASING POWER REAL INCOME RURAL AREAS RURAL HOUSEHOLDS RURAL POPULATION RURAL RESIDENTS SAVINGS SKILLED LABOR STATISTICAL METHODS STRUCTURAL ADJUSTMENT TIME FRAME TRADE LIBERALIZATION TRADE REFORMS UNDERESTIMATES URBAN AREAS URBAN HOUSEHOLDS UTILITY FUNCTION VALUE ADDED WAGES WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2001/08/1561503/trade-reform-household-welfare-case-mexico http://hdl.handle.net/10986/19559

Description
Summary:	The authors use a two-step, computationally simple procedure to analyze the effects of Mexico's potentially unilateral tariff liberalization. First, they use a computable general equilibrium model provided by the Global Trade Analysis Project (GTAP) as the new price generator. Second, they apply the price changes to Mexican household data to assess the effects of the simulated policy on poverty and income distribution. By choosing GTAP as the price generator, the authors are able to model Mexico's differential tariff structure appropriately: almost zero for North American Free Trade Agreement (NAFTA) members and higher tariffs for nonmembers. Even starting with low tariff protection, simulation results show that tariff reform will have a positive effect on welfare for all expenditure deciles. Under an assumption of nonhomothetic individual preferences, trade liberalization benefits people in the poorer deciles more than those in the richer ones.

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