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 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.

Bibliographic Details

Main Authors:	Laborde, David, Martin, Will, van der Mensbrugghe, Dominique
Language:	English
Published:	2011-05-01
Subjects:	ACCOUNTING, ADVERSE IMPACTS, AGRICULTURAL TRADE, AGRICULTURE, APPAREL, APPLIED STUDIES, APPLIED TARIFF, AVERAGE TARIFF, AVERAGE TARIFFS, BENEFITS OF TRADE, BILATERAL TARIFFS, BORDER PROTECTION, BUDGETING, CAPITAL GOODS, CONSTANT ELASTICITY OF SUBSTITUTION, COUNTRY OF ORIGIN, DEMAND ELASTICITIES, DEVELOPING COUNTRIES, DEVELOPMENT POLICY, DOMESTIC DEMAND, DOMESTIC PRICE, ECONOMETRIC ANALYSIS, ECONOMIC EFFICIENCY, ECONOMIC INTEGRATION, ECONOMIC MODELS, ECONOMIC WELFARE, ELASTICITY, ELASTICITY OF SUBSTITUTION, EXPENDITURE, EXPENDITURES, EXPORT MARKETS, EXPORT VOLUME, EXPORTERS, EXPORTS, FEDERAL RESERVE, FEDERAL RESERVE BANK, FREE TRADE, FREE TRADE AGREEMENTS, FULL LIBERALIZATION, GDP, GENERAL EQUILIBRIUM ANALYSIS, GENERAL EQUILIBRIUM MODEL, GENERAL EQUILIBRIUM MODELING, GLOBAL COMPUTABLE GENERAL EQUILIBRIUM, GLOBAL TRADE, GLOBAL TRADE ANALYSIS, GLOBALIZATION, HIGH TARIFFS, IMPORT PRICES, IMPORT QUANTITIES, IMPORT VOLUMES, INCOME TAXES, INTERNATIONAL BANK, INTERNATIONAL ECONOMICS, INTERNATIONAL PRICES, INTERNATIONAL TRADE, LAFFER CURVE, LOW TARIFFS, MARKET ACCESS, MIDDLE INCOME COUNTRIES, NATURAL RESOURCES, OPEN ECONOMY, PREFERENTIAL ACCESS, PREFERENTIAL TARIFFS, PRICE INDEX, PRODUCTION FUNCTION, PROTECTION RATES, PROTECTIONIST, RATES OF PROTECTION, REAL GDP, REAL INCOME, REDUCTION IN TARIFFS, RETURN, RETURNS, REVENUE CURVE, SET OF TARIFFS, TARIFF CHANGES, TARIFF LINES, TARIFF PREFERENCE, TARIFF PREFERENCES, TARIFF PROTECTION, TARIFF RATE, TARIFF RATES, TARIFF REDUCTION, TARIFF REDUCTIONS, TARIFF REVENUE, TARIFF REVENUES, TARIFF STRUCTURE, TERMS OF TRADE, TERMS OF TRADE EFFECTS, TERMS-OF-TRADE GAINS, TRADE BARRIERS, TRADE COSTS, TRADE DISTORTIONS, TRADE FLOWS, TRADE LIBERALIZATION, TRADE LIBERALIZATIONS, TRADE LOSSES, TRADE POLICY, TRADE REFORM, TRADE REFORMS, TRADE VOLUMES, TRADING, TRADING PARTNERS, TRUST FUND, UTILITY FUNCTION, UTILITY FUNCTIONS, VALUE OF IMPORTS, VECTOR OF TARIFF, WELFARE GAINS, WELFARE IMPACTS, WORLD PRICES, WTO,
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 https://hdl.handle.net/10986/3428
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