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GTAP Resource #2344

"Methods to Aggregate Import Tariffs and their Impacts on Modeling Results"
by Pelikan, Janine and Martina Brockmeier

The Doha Round is currently at the centre of the political debate in agriculture. To analyze the impacts of WTO market access proposals with the help of economic trade models, it is necessary to condense the tariff data. During the aggregation process the tariffs can be distorted. A bias arises due to the implemented aggregation method. Simple averages and trade weighted averages are commonly used methods. An alternative to these methods is the application of the Trade Restrictiveness Index (TRI) or the Mercantilist Trade Restrictiveness Index (MRTI). There is growing literature on these indexes. While some studies calculate these indices in a general equilibrium framework, some use a partial equilibrium framework. This paper provides an overview of the current literature on this topic.
The calculation of the TRI as well as the MTRI requires more data than the calculation of the simple or trade weighted average. In this paper a simple, partial equilibrium calculation of the TRI and the MTRI is proposed and applied at the 6-digit tariff line level.
The resulting import tariffs are compared with the tariffs derived by trade weighting. The results show a high correlation between the aggregation methods. However, the level of the aggregated tariffs differs strongly. Additionally, import tariffs aggregated with the help of TRI and MTRI are substituted for the original applied import tariffs of the standard GTAP data base. Multilateral trade liberalization scenarios are then implemented at the tariff line level and the resulting reduced import tariff is as well aggregated with the help of TRI and MTRI to show how sensitive the model behaves to different aggregation methods. For each scenario bound and applied tariffs are taken into account. Finally the modeling results are compared by considering the welfare effects.

Resource Details (Export Citation) GTAP Keywords
Category: 2007 Conference Paper
Status: Published
By/In: Presented at the 10th Annual Conference on Global Economic Analysis, Purdue University, USA; Journal of Economic Integration Vol. 23. No. 3
Date: 2007
Created: Pelikan, J. (4/13/2007)
Updated: Pelikan, J. (7/31/2007)
Visits: 3,804
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