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Can Trade Policies Soften the Economic Impacts of an Avian Influenza Outbreak? Simulations From a CGE Model of the Philippines

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  • Rodríguez, U-Primo E.
  • Garcia, Yolanda T.
  • Garcia, Arnulfo G.
  • Tan, Reynaldo L.

Abstract

The paper examines the possibilities of using trade policy to address the adverse economic effects of an avian influenza outbreak in the Philippines. In particular, it employs a computable general equilibrium (CGE) model for analyzing the likely effects of two options; namely, a) a ban on imported poultry, and b) the removal of tariffs on non-poultry meat products. Using six model scenarios (i.e., production shocks, consumption shocks, ban on poultry imports, removal of tariff on non-poultry imports, and selected combinations of these shocks), the simulation results reveal that (a) the consumption and production shocks are expected to have a contractionary effect on real GDP; (b) the expected fall in the output of poultry products explains most of the decline in real GDP; (c) the production shock appears to have a larger impact since this explains most of the decline in real GDP as well as the increase in the general price level; (d) while the consumption shock tends to have a larger impact on the poultry products, the production shock dominates the aggregate responses because of its effects on other industries, and (e) avian influenza is likely to have far-reaching effects on the economy, way beyond the poultry sector. Based on these results, this paper supports the use of an import ban as a preventive measure against the occurrence of an avian influenza attack. This is based on the finding that the economic costs from such a measure appear to be lower than the costs associated with the disease. In contrast, the study finds that there is a weak case for removing tariffs on non-poultry meat products as a means to soften the harmful impacts of an avian influenza outbreak.

Suggested Citation

  • Rodríguez, U-Primo E. & Garcia, Yolanda T. & Garcia, Arnulfo G. & Tan, Reynaldo L., 2007. "Can Trade Policies Soften the Economic Impacts of an Avian Influenza Outbreak? Simulations From a CGE Model of the Philippines," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 4(2), pages 1-10, December.
    • Handle: RePEc:ags:phajad:166011
    DOI: 10.22004/ag.econ.166011
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    References listed on IDEAS

    as
    1. Cabalu, Helen & Rodriguez, U-Primo, 2007. "Trade-offs in Trade Liberalization: Evidence from the Philippine 2005 Tariff Changes," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 637-663.
    2. Warwick McKibbin & Alexandra Sidorenko, 2006. "Global Macroeconomic Consequences of Pandemic Influenza," CAMA Working Papers 2006-26, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
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    Cited by:

    1. Zamani, Omid & Chibanda, Craig & Pelikan, Janine, 2021. "Investigating Alternative Poultry Trade Policies in the Context of African Countries: Evidence from Ghana," 2021 Conference, August 17-31, 2021, Virtual 315173, International Association of Agricultural Economists.
    2. Zamani, Omid & Chibanda, Craig & Pelikan, Janine, 2020. "Tariff Escalation and Import Bans in the Economic Partnership Agreement between the EU and West Africa," Conference papers 333239, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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