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Abstract
In recent years, poverty reduction has become a topic of increasing concern in trade negotiations lead mainly by the World Trade Organization (WTO) and the World Bank. The linkages between trade liberalization and poverty analysis are a growing economic research area, which is reflected in the broad diversity of approaches developed for this study. Generally, the effect of liberalization on price changes is considered an important pathway to understanding how liberalization affects the poor. One of the methods currently applied for measuring the impact of trade liberalization on poverty alleviation is Computable General Equilibrium (CGE) modelling coupled with household modelling. CGE modelling simulates the international economic environment that produces the change in national prices, and household modelling assesses the effects of prices changes at the household level. The theoretical approach of this study aims to describe the household structure and the main features to be considered in analyzing the effects of trade liberalization on households. Current household analysis approaches are reviewed as well. The empirical approach of this research is to analyze simulations for Mexico obtained with a GTAP Model extension. The extended GTAP version developed in this contribution splits the private household system of GTAP into several different Mexican household types, according to expenditure behavior.