FEEM working papers "Note di lavoro"
2014.025
Date: 04/2012

World Tariff Liberalization in Agriculture: An Assessment Following a Global CGE Trade Model for EU15 Regions


Authors: Gabriele Standardi, Federico Perali, Luca Pieroni
Type: Journal
JEL n.: F13, D58, Q17
JEL: Journal of Policy Modeling
Pages: Vol. 34, Issue 2, Pages 155-180
Keywords: CGE modeling; International trade; Agriculture

Abstract

This paper aims at modeling a global CGE trade model for the EU15 subnational regions. This model is used to assess production reallocation across sectors in each EU15 region, assuming a scenario in which world tariff liberalization is implemented in the agricultural sector. The model is parsimonious in terms of data, focusing on unskilled and skilled labor as the source of heterogeneity across regions. A stylized model is built to interpret trade policy effects. Results show decreases in agricultural production in the EU15 of about 0.93%. All regions reduce agriculture but show different magnitudes in the relative changes of production. Large reallocation effects are observed between manufactures and services, some regions specializing in the former and others in the latter. In addition, the introduction of labor mobility within the EU15 and the EU27 causes strong amplification effects in manufactures and services.

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Suggested citation: Federico Perali, Luca Pieroni, Gabriele Standardi, World tariff liberalization in agriculture: An assessment using a global CGE trade model for EU15 regions, Journal of Policy Modeling, Volume 34, Issue 2, March–April 2012, Pages 155-180, ISSN 0161-8938, http://dx.doi.org/10.1016/j.jpolmod.2012.01.002.

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