Stephen Tokarick

Measuring the Impact of Distortions in Agricultural Trade in Partial and General Equilibrium

This paper provides quantitative estimates of the impact of removing agricultural support (both tariffs and subsidies) in partial- and general-equilibrium frameworks. The results show that agricultural support in industrial countries is highly distortionary and tariffs have a larger distortionary impact than subsidies. Removal of agricultural support would likely raise the international prices of food, resulting in an increase in the cost of food for many net-food- importing countries, although the increase is generally small. The results also show that most of the benefits from removing agricultural support accrue to the countries that liberalize.

Competitiveness Indicators : A Theoretical and Empirical Assessment

This paper discusses five indicators of competitiveness: real exchange rates based on consumer price indices, export unit values of manufacturing goods, the relative price of traded to nontraded goods, normalized unit labor costs in manufacturing, and the ratio of normalized unit labor costs to value-added deflators in manufacturing. It discusses how each of these measures is associated with changes in a country`s balance of trade in goods and nonfactor services and examines the relationship among these indicators. It then examines the empirical performance of three of the indicators in terms of their ability to explain trade flows.

An assessment of three measures of competitiveness

An Assessment of Three Measures of Competitiveness. -This paper discusses three indicators of competitiveness: real exchange rates based on consumer price indices, export unit values of manufacturing goods, and normalized unit labour costs in manufacturing. It discusses how each of these measures is associated with changes in a countrys balance of trade in goods and nonfactor services and examines how each one of these indicators is related to each other. It then examines the empirical performance of each in terms of its ability to explain trade flows. The conclusion is that in examining an issue as complex as trade competitiveness, the use of one indicator is suboptimal.ZusammenfassungEine Beurteilung dreier Maße für die Wettbewerbsfähigkeit.-Die Verfasser prüfen drei Indikatoren für die internationale Wettbewerbsfähigkeit eines Landes: Reale Wechselkurse auf der Grundlage von Konsumentenpreisindizes, von Einheitswerten der Ausfuhr gewerblicher Erzeugnisse und von standardisierten Lohnstückkosten in der Industrie. Sie untersuchen, wie jedes dieser Maße mit Änderungen in der Handels und Dienstleistungsbilanz eines Landes verbunden ist, und prüfen, wie die Indikatoren untereinander in Beziehung stehen. Sie untersuchen deren empirische Brauchbarkeit anhand ihrer Fähigkeit, Handelsströme zu erklären. Es ergibt sich, daß zur Prüfung einer so komplexen Erscheinung, wie es die Wettbewerbsfähigkeit im internationalen Handel ist, die Verwendung nur eines Indikators suboptimal wäre.

Does Import Protection Discourage Exports

This paper points out that while many developing countries seek to increase their export earnings, they have not embraced fully the notion that their own pattern of import protection hurts their export performance. The paper quantifies the extent to which import protection acts as a tax on a countrys export sector and finds that for many developing countries, the magnitude of the implicit tax is substantial-about 12 percent, on average, for the countries studied. The paper also illustrates the effects of various tariff-cutting scenarios in the Doha Round on export incentives and concludes that, in general, developing countries could increase their export earnings by reducing their own import tariffs, but countries must be careful about how these tariff reductions are achieved. For example, tariff-cutting schemes that exempt certain sectors could actually be harmful.

Quantifying the Impact of Trade on Wages: the Role of Nontraded Goods

This paper uses an applied general-equilbrium model to decompose the effects of changes in trade- and technology-related variables between 1982 and 1996 in the United States on the wages of skilled and unskilled labor. The results indicate that trade-related variables (tariff cuts, improvement in the terms of trade, and the increase in the trade deficit) had little impact on the widening wage gap. The major factor behind the rise in the skilled wage relative to the unskilled wage was differential rates of growth in skill-biased technical change across sectors. The paper also highlights the role that nontraded goods play in explaining the wage gap. Finally, the paper presents estimates of how wages would change if the economy moved to autarky. The results show that expanding trade could actually reduce wage inequality, rather than increase it.

External Shocks, the Real Exchange Rate, and Tax Policy

This paper uses a computable general equilibrium model of the economy of Trinidad and Tobago to assess the effects of trade liberalization and terms-of-trade shocks on the real exchange rate and the overall fiscal position of the government. The model is also used to evaluate the implications of alternative tax policies designed to offset the increase in the budget deficit of the central government that results from both types of external sector shocks.

U.S.Adjustment In The 1990S: A Cge Analysis Of Alternative Trade Strategies

This paper investigates the implications for the structure of the U.S.economy of a reduction in the U.S. trade deficit. We explore two alternative adjustment scenarios. First, we assume an environment of successful world trade liberlization. An alternative view is that the world economy will lapse into a protectionist environment. We use a 30-sector computable general equilibrium (CGM) model of the United States to analyze the impact of these two scenarios. When analyzing the protectionist scenario, we do a variety of experiments designed to explore the impact of protectionist policies on the U.S. economy. [C68, F13]

How large is the bias against exports from import tariffs

One goal that both developed and developing countries share is to increase their export earnings. To do this, countries sometimes resort to various export promotion schemes or request ‘special and differential treatment’ for their exports. However, countries have not fully embraced the notion that their own import tariffs act as a tax on their exports. That is, import protection frustrates their goal of increasing exports. This paper presents quantitative estimates of the extent to which import tariffs discourage exports. The results show that for some countries the bias imparted by tariffs is substantial. Therefore, reducing import tariffs is one way to improve export incentives.

Trade Liberalization, Macroeconomic Adjustment, and Welfare: Unifying Trade and Macro Models

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.

Why Has Inflation in the United States Remained So Low?Reassessing the Importance of Labor Costs and the Price of Imports

This paper examines some of the factors that have been influential in keeping inflation low in the United States during 1995–98, despite strong growth and high levels of employment. Our results identify three important variables: declines in import prices, a slowdown in the growth of nonwage labor compensation, and a decline in labor costs. We also reassess the role of labor costs and import prices in determining price inflation.