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GTAP Resource #1317

"Is the Devil in the Details?: Assessing the Welfare Implications of Agricultural and Non Agricultural Trade Reforms"
by Martin, Will, Dominique van der Mensbrugghe and Vlad Manole

The use of traditional trade-weighted average tariffs biases the estimated welfare benefits of trade reform downwards through averaging distortions and use trade weight bias. Decomposition of total tariff variation suggests that over half the variation in EU agricultural tariffs is lost in standard models, a loss compounded by weighting bias. The Bach-Martin aggregation procedure is used to avoid this loss of information in an analysis of EU and Indonesian tariff reform. The results increase the estimated global benefits of EU agricultural trade reform by over 150%. Inappropriate aggregation may be causing very substantial underestimation of the global gains from agricultural trade reform. For Indonesia, the underestimation of the benefits using a weighted average approach is much more serious for nonagricultural products, where the variation in tariffs within groups is more important.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
2003 Conference Paper
Status: Published
By/In: Presented at the 6th Annual Conference on Global Economic Analysis, The Hague, The Netherlands
Date: 2003
Created: Bacou, M. (5/23/2003)
Updated: Bacou, M. (9/27/2003)
Visits: 2,836
- Agricultural policies

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