DP9083 Estimating effects of price-distorting policies using alternative distortions databases

Author(s): Kym Anderson, Will Martin, Dominique van der Mensbrugghe
Publication Date: August 2012
Keyword(s): agricultural protection growth, tariff aggregation, trade policy counterfactuals
JEL(s): F13, F15, F17
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9083

This paper addresses three questions relating to the very extensive use of the GTAP global trade protection database: Are there additional price-distorting policy instruments worthy of inclusion in the base year? What is the appropriate counterfactual set of price distortions in the year of concern (such as when a proposed reform is expected to be fully implemented, as distinct from the base year)? And how are the price distortions (e.g. tariff rates) on individual products aggregated to the GTAP product groups? We show the estimated welfare effects of policies can change substantially when more-appropriate measures of distortions are used.