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Poverty Vulnerability and Trade Policy: Are the Likely Impacts Discernable?

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Author Info
Valenzuela, Ernesto
Hertel, Thomas

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Abstract

Trade policy reform prospects have generated debate about the impacts on poverty. Some critics assert that price changes induced by trade reform are minimal and may not be distinguishable from price fluctuations induced by other shocks to the global economy. This paper addresses this issue by developing an approach to assess whether poverty changes induced by trade reform can be statistically discernable, based on a comparison in the grains sector. Fluctuations in grains markets are implemented by incorporating stochastic simulations into a CGE model of the global economy. The resulting price distributions are inputted to a micro-simulation based on national household surveys. The conclusions are based on the comparison of the resulting poverty distributions from the weather-induced variability only, versus the combined effect of the latter and trade reform. Results indicate that, in this conservative approach of evaluating only the global grains markets, the short-run impacts on poverty of trade liberalization can not be distinguished from market volatility in some countries.

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Publisher Info
Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2006 Annual meeting, July 23-26, Long Beach, CA with number 21397.

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Date of creation: 2006
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Handle: RePEc:ags:aaea06:21397

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Keywords: International Relations/Trade;

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  1. Cranfield, J. A. L. & Preckel, Paul V. & Eales, James S. & Hertel, Thomas W., 2002. "Estimating consumer demands across the development spectrum: maximum likelihood estimates of an implicit direct additivity model," Journal of Development Economics, Elsevier, vol. 68(2), pages 289-307, August. [Downloadable!] (restricted)
  2. Anderson, Kym & Valenzuela, Ernesto, 2006. "WTO's Doha Cotton Initiative: A Tale of Two Issues," CEPR Discussion Papers 5567, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  3. Hertel, Thomas & David Hummels & Maros Ivanic & Roman Keeney, 2003. "How Confident Can We Be in CGE-Based Assessments of Free Trade Agreements?," GTAP Working Papers 1324, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University. [Downloadable!]
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  4. Pritchett, Lant & Suryahadi, Asep & Sumarto, Sudarno, 2000. "Quantifying vulnerability to poverty - a proposed measure, applied to Indonesia," Policy Research Working Paper Series 2437, The World Bank. [Downloadable!]
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  7. Keeney, Roman & Thomas Hertel, 2005. "GTAP-AGR : A Framework for Assessing the Implications of Multilateral Changes in Agricultural Policies," GTAP Technical Papers 1869, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University. [Downloadable!]
  8. Valenzuela, Ernesto & Hertel, Thomas W. & Ivanic, Maros & Pratt, Alejandro Nin, 2004. "Evaluating Poverty Impacts of Globalization and Trade Policy Changes on Agricultural Producers," 2004 Annual meeting, August 1-4, Denver, CO 20242, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  9. Cranfield, J. A. L. & Preckel, Paul V. & Eales, James S. & Hertel, Thomas W., 2004. "Simultaneous estimation of an implicit directly additive demand system and the distribution of expenditure--an application of maximum entropy," Economic Modelling, Elsevier, vol. 21(2), pages 361-385, March. [Downloadable!] (restricted)
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  11. DeVuyst, Eric A. & Preckel, Paul V., 1997. "Sensitivity analysis revisited: A quadrature-based approach," Journal of Policy Modeling, Elsevier, vol. 19(2), pages 175-185, April. [Downloadable!] (restricted)
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  13. Hertel, Thomas W. & Keeney, Roman & Valenzuela, Ernesto, 2004. "Global Analysis Of Agricultural Trade Liberalization: Assessing Model Validity," 2004 Annual meeting, August 1-4, Denver, CO 20199, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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  15. Thomas W. Hertel & Maros Ivanic & Paul V. Preckel & John A. L. Cranfield, 2004. "The Earnings Effects of Multilateral Trade Liberalization: Implications for Poverty," World Bank Economic Review, Oxford University Press, vol. 18(2), pages 205-236.
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  20. Ruffin, Roy & Jones, Ronald, 1977. "Protection and real wages: The neoclassical ambiguity," Journal of Economic Theory, Elsevier, vol. 14(2), pages 337-348, April. [Downloadable!] (restricted)
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  23. Arndt, Channing, 1996. "An Introduction to Systematic Sensitivity Analysis via Gaussian Quadrature," GTAP Technical Papers 305, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University. [Downloadable!]
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