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GTAP Resource #1949

"Potential Optimal Tariff Rates for Tanzania: A Computable General Equilibrium Analysis "
by Kaliba, Aloyce

Computable General Equilibrium (CGE) models are usually presented as a set of simultaneous equations that describe the economic activities of consumers, producers, government, and traders in the markets for factors of production (inputs), and for goods and services (outputs). The supply and demand in each market is equilibrated by a market-clearing price. The model is called computable because simulation is used to find the prices that clear the markets for inputs and outputs. The models allow for the establishment of a direct link between economic structures as embodied in a social accounting matrix and policy changes. The generic CGE model of Tanzania is presented based on the 2001 national social accounting matrix. The objective is to develop a detailed and suitable model for assessing impacts of new and potential macroeconomic policy options available for Tanzania. For illustration purposes, the model is used to endogenously determine tax rates and corresponding pareto optimum capital adjustment needed to maintain level of government revenue. The results indicate that lower tax rates will increase production for both domestic and export markets and lower price indices across the board. However, total investment has to increase by more than 2% so as not to make all households at least as well-off as they were before the new taxes.

Key Words: CGE, Pareto-optimal, Tariff, Tanzania.

JEL Classification: O21, R13, R15

Resource Details (Export Citation) GTAP Keywords
Category: 2006 Conference Paper
Status: Published
By/In: Presented at the 9th Annual Conference on Global Economic Analysis, Addis Ababa, Ethiopia
Created: Kaliba, A. (4/15/2006)
Updated: Kaliba, A. (4/15/2006)
Visits: 2,717
- Economic development
- Calibration and parameter estimation
- Africa (East)

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