European Parliament Library

Trade Liberalization, Macroeconomic Adjustment, and Welfare :, Unifying Trade and Macro Models, Ehsan Choudhri, Hamid Faruqee, Stephen Tokarick

Abstract
Trade liberalization leads to long-run gains, but it can also involve costly short-run macroeconomic adjustment. The paper explores the relative importance of these effects within a dynamic general equilibrium model that captures key elements of both international trade and macroeconomic models. The welfare effect of trade liberalization is decomposed into a steady-state efficiency gain and a transitional loss associated with wage-price stickiness. Our estimates show that the transitional loss is small relative to the steady-state gain, and tends to be lower under flexible as compared to fixed exchange rates. We also show that the loss can be reduced further by a flexible price-level targeting policy rule
Table Of Contents
""Contents""; ""I. INTRODUCTION""; ""II. THEORETICAL FRAMEWORK""; ""III. QUANTITATIVE ANALYSIS""; ""IV. CONCLUSIONS""; ""REFERENCES""
Language
eng
Literary Form
non fiction
Edition
1st ed.
Note
"December 2006."
Physical Description
1 online resource (28 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9786613824707

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