Measuring the Impacts of Global Trade Reform with Optimal Aggregators of Distortions
Traditional weighted-average measures of trade distortions are widely used in analyzing global and regional reforms, despite well-known deficiencies. This paper develops and applies optimal aggregators for the real-world case of multiple countries...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110518163857 http://hdl.handle.net/10986/3428 |
| Summary: | Traditional weighted-average measures of
trade distortions are widely used in analyzing global and
regional reforms, despite well-known deficiencies. This
paper develops and applies optimal aggregators for the
real-world case of multiple countries and commodities with
much more detailed information on trade than on production
and consumption. The approach reflects the fact that
different aggregators are needed for expenditure on imported
goods and for tariff revenues, and allows for incorporation
of both intensive and extensive margins of adjustment to
reform. Applications confirm that the technique is
straightforward enough for widespread use, and point to
close to a doubling of the welfare gains at the intensive
margin when using the highest possible level of
international commodity disaggregation, with larger gains in
developing regions than in the industrial countries. The
measured income gains increase along the entire path of
liberalization, with slightly larger increases in the
earlier stages, where the gaps between the responses of the
expenditure and tariff revenue aggregators are largest.
Sensitivity analysis suggests that, for global trade reform,
the ease of substitution between tariff lines is much more
important than that between varieties from different countries. |
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