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Abstract

The Purposes of this paper are twofold (i) to evaluate changes in welfare gains and their distribution due to trade liberalization when imperfect labor markets are considered, (ii) to evaluate the impact of the recent reforms of the European agricultural policy on the world welfare. The results of two versions of a dynamic world computable general equilibrium (CGE) model, using the GTAP database version 6 are compared. In the first version, a standard world CGE approach is followed with perfect labor mobility across sectors. In the second version we assume that labor shifts freely within the aggregated sectors -agriculture, manufactures, services- but not across them .After a brief description of the two versions, changes in welfare, represented not only by the world GDP but also by the consumption level of two types of households (middle-low and middle-high) in 7 regions (Brazil, China, India, Least developed countries, European Union, United States, Rest of the World) after partial trade liberalization are presented. Theoretical and political consequences of the results are discussed.

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