The impact of trade liberalisation on poverty and inequality: evidence from CGE models

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Abstract

In this paper we carry out a systematic review of the evidence from CGE models regarding the effect of trade liberalisation on income inequality and poverty in developing countries. The evidence suggests quite strongly that trade liberalisation tends to reduce poverty, but is more likely to increase inequality than reduce it; however, the predicted effects are relatively small. Variation in the size and direction of effects can be explained by the choice of outcome measure, the fiscal response to liberalisation, the type of CGE model, and certain country characteristics – but not the method used to link the CGE model to the distribution of income.

Original languageEnglish
Pages (from-to)1208-1227
Number of pages20
JournalJournal of Policy Modeling
Volume42
Issue number6
Early online date23 Jun 2020
DOIs
Publication statusPublished - Nov 2020

Keywords

  • CGE models
  • Inequality
  • Poverty
  • Trade liberalisation

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