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GTAP Resource #1341

"Trade Liberalization, product variety and growth in a small open economy: a quantitative assessment"
by Tarr, David G. and Thomas Rutherford

We develop a numerical growth model that quantifies the welfare effects of trade liberalization. Additional intermediate input varieties provide the engine of growth and dramatically magnify the welfare gains from trade liberalization. In our central model, a ten percent tariff cut leads to a 10.6 percent estimated gain in Hicksian EV. Systematic sensitivity analysis shows that there is virtually no chance of a welfare increase less than three percent, but a 6.6 percent chance of a welfare gain greater than 18 percent. We show that complementary reforms are crucial to fully realize the potential gains from the trade reform.

Available as the journal article at

Resource Details (Export Citation) GTAP Keywords
Category: Other CGE Application
Status: Published
By/In: Journal of International Economics, Vol. 56, Issue 2, March
Date: 2002
Created: Tarr, D. (8/8/2003)
Updated: Tarr, D. (8/28/2007)
Visits: 2,186
- Economic growth

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