IDEAS home Printed from https://ideas.repec.org/a/spr/inrvec/v54y2007i1p148-175.html
   My bibliography  Save this article

Effects of trade liberalization on domestic prices: Some evidence from Tunisian manufacturing

Author

Listed:
  • Ali Saggay
  • Almas Heshmati
  • Mohamed Dhif

Abstract

This paper presents estimates of the competitive effects of trade liberalization on domestic pricing behaviour of Tunisian manufacturing industries. The theoretical framework is based on a dynamic flexible adjustment model of price determination in a small open economy. It investigates the process of adjustment in price level toward a desired level. The adjustment process is both industrial and time-specific. The empirical results show that, in the long run, domestic price responds greatly to import penetration, followed by demand pressure. There was a negative effect from import competition on domestic price. Trade policy is a viable policy option to promote competitiveness.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Ali Saggay & Almas Heshmati & Mohamed Dhif, 2007. "Effects of trade liberalization on domestic prices: Some evidence from Tunisian manufacturing," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 54(1), pages 148-175, March.
    • Handle: RePEc:spr:inrvec:v:54:y:2007:i:1:p:148-175
    DOI: 10.1007/s12232-007-0008-3
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s12232-007-0008-3
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s12232-007-0008-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Corbo, Vittorio & McNelis, Paul D, 1989. "The Pricing of Manufactured Goods during Trade Liberalization: Evidence from Chile, Israel, and Korea," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 491-499, August.
    2. Heshmati, Almas, 2001. "The Dynamics of Capital Structure: Evidence from Swedish Micro and Small Firms," SSE/EFI Working Paper Series in Economics and Finance 0440, Stockholm School of Economics.
    3. Levinsohn, James, 1993. "Testing the imports-as-market-discipline hypothesis," Journal of International Economics, Elsevier, vol. 35(1-2), pages 1-22, August.
    4. Luca Papi & Alberto Zazzaro, 2000. "How Does the EU Agenda Influence Economies outside the EU? The Case of Tunisia," Development Working Papers 148, Centro Studi Luca d'Agliano, University of Milano.
    5. Eli Bekman & John Bound & Stephen Machin, 1998. "Implications of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1245-1279.
    6. Jaan Masso & Almas Heshmati, 2004. "The optimality and overuse of labour in Estonian manufacturing enterprises," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(4), pages 683-720, December.
    7. Jozef M. Van Brabant, 1988. "Production Specialization in the CMEA — Concepts and Empirical Evidence," Journal of Common Market Studies, Wiley Blackwell, vol. 26(3), pages 287-315, March.
    8. Harrison, Ann E., 1990. "Productivity, imperfect competition, and trade liberalization in Cote d'Ivoire," Policy Research Working Paper Series 451, The World Bank.
    9. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, October.
    10. Baltagi, Badi H. & Griffin, James M., 1997. "Pooled estimators vs. their heterogeneous counterparts in the context of dynamic demand for gasoline," Journal of Econometrics, Elsevier, vol. 77(2), pages 303-327, April.
    11. Kardasz, Stanley W. & Stollery, Kenneth R., 1988. "Market structure and price adjustment in Canadian manufacturing industries," Journal of Economics and Business, Elsevier, vol. 40(4), pages 335-342, November.
    12. Robbins, Donald J., 1996. "Hos Hits Facts: Facts Win Evidence On Trade And Wages In The Developing World," Harvard Institute for International Development (HIID) Papers 294374, Harvard University, Kennedy School of Government.
    13. Yang, Yung Y. & Hwang, Min, 2001. "The pricing behavior of Korean manufactured goods during trade liberalization," Journal of Policy Modeling, Elsevier, vol. 23(4), pages 357-369, May.
    14. Domberger, Simon, 1981. "Price Adjustment and Market Structure: A Reply," Economic Journal, Royal Economic Society, vol. 91(364), pages 1031-1035, December.
    15. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins of Technology-Skill Complementarity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 693-732.
    16. Khalid Sekkat, 1996. "Regional integration among the Maghreb countries and free trade with the European union: a challenge for both sides of the mediterranean," ULB Institutional Repository 2013/7332, ULB -- Universite Libre de Bruxelles.
    17. David O’Connor & Mariarosa Lunati, 1999. "Economic Opening and the Demand for Skills in Developing Countries: A Review of Theory and Evidence," OECD Development Centre Working Papers 149, OECD Publishing.
    18. Domberger, Simon, 1980. "Price Dynamics and Industrial Structure in the U.K.: An Input-Output Analysis," The Manchester School of Economic & Social Studies, University of Manchester, vol. 48(3), pages 284-306, September.
    19. Yang, Yung Y & Hwang, Min, 1994. "Price Behavior in Korean Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 461-470, August.
    20. David Encaoua, 1983. "Dynamique des prix et structure industrielle : Une analyse théorique et économétrique," OECD Economics Department Working Papers 10, OECD Publishing.
    21. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    22. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
    23. Domberger, Simon, 1979. "Price Adjustment and Market Structure," Economic Journal, Royal Economic Society, vol. 89(353), pages 96-108, March.
    24. Pissarides, Christopher A, 1997. "Learning by Trading and the Returns to Human Capital in Developing Countries," The World Bank Economic Review, World Bank, vol. 11(1), pages 17-32, January.
    25. Robert N. Horn, 1988. "Analysis," Challenge, Taylor & Francis Journals, vol. 31(4), pages 56-58, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hu, Xiurong & Pollitt, Hector & Pirie, Jamie & Mercure, Jean-Francois & Liu, Junfeng & Meng, Jing & Tao, Shu, 2020. "The impacts of the trade liberalization of environmental goods on power system and CO2 emissions," Energy Policy, Elsevier, vol. 140(C).
    2. Reda Cherif & Sandesh Dhungana & Xiangming Fang & Mr. Jesus R Gonzalez-Garcia & Yuanchen Yang & Mustafa Yenice & Jung Eun Yoon, 2020. "Competition, Competitiveness and Growth in Sub-Saharan Africa," IMF Working Papers 2020/030, International Monetary Fund.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lanouar Charfeddine & Zouhair Mrabet, 2015. "Trade liberalization and relative employment: further evidence from Tunisia," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(1), pages 173-202, June.
    2. Jorge Saba Arbache, 2001. "Trade Liberalisation and Labor Markets in Developing Countries: Theory and Evidence," Studies in Economics 0112, School of Economics, University of Kent.
    3. Ilham Haouas & Mahmoud Yagoubi & Almas Heshmati, 2002. "Labour-Use Efficiency in Tunisian Manufacturing Industries: A Flexible Adjustment Model," WIDER Working Paper Series DP2002-103, World Institute for Development Economic Research (UNU-WIDER).
    4. Haouas Ilham & Yagoubi Mahmoud & Heshmati Almas, 2003. "Labor-use Efficiency in Tunisian Manufacturing Industiries," Review of Middle East Economics and Finance, De Gruyter, vol. 1(3), pages 1-20, December.
    5. Julien Gourdon, 2011. "Wage inequality in developing countries: South–South trade matters," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 58(4), pages 359-383, December.
    6. repec:ipg:wpaper:2014-504 is not listed on IDEAS
    7. Federico M. Giesenow & Jakob de Haan, 2019. "The influence of government ideology on monetary policy: New cross‐country evidence based on dynamic heterogeneous panels," Economics and Politics, Wiley Blackwell, vol. 31(2), pages 216-239, July.
    8. Scott, K. Rebecca, 2015. "Demand and price uncertainty: Rational habits in international gasoline demand," Energy, Elsevier, vol. 79(C), pages 40-49.
    9. Antonio Avalos & Andreas Savvides, 2006. "The Manufacturing Wage Inequality in Latin America and East Asia: Openness, Technology Transfer, and Labor Supply," Review of Development Economics, Wiley Blackwell, vol. 10(4), pages 553-576, November.
    10. Tomasz Mickiewicz & Kate Bishop & Urmas Varblane, 2004. "Financial Constraints in Investment - Foreign Versus Domestic Firms. Panel Data Results From Estonia, 1995-1999," William Davidson Institute Working Papers Series 2004-648, William Davidson Institute at the University of Michigan.
    11. Piva, Mariacristina & Santarelli, Enrico & Vivarelli, Marco, 2005. "The skill bias effect of technological and organisational change: Evidence and policy implications," Research Policy, Elsevier, vol. 34(2), pages 141-157, March.
    12. Melo, Patricia C. & Ramli, Ahmad Razi, 2014. "Estimating fuel demand elasticities to evaluate CO2 emissions: Panel data evidence for the Lisbon Metropolitan Area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 67(C), pages 30-46.
    13. Green, Francis & Dickerson, Andy & Saba Arbache, Jorge, 2001. "A Picture of Wage Inequality and the Allocation of Labor Through a Period of Trade Liberalization: The Case of Brazil," World Development, Elsevier, vol. 29(11), pages 1923-1939, November.
    14. Gallego, Francisco A., 2012. "Skill Premium in Chile: Studying Skill Upgrading in the South," World Development, Elsevier, vol. 40(3), pages 594-609.
    15. Brücker, Herbert & Siliverstovs, Boriss, 2006. "Estimating and forecasting European migration : methods, problems and results," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 39(1), pages 35-56.
    16. Pock, Markus, 2007. "Gasoline and Diesel Demand in Europe: New Insights," Economics Series 202, Institute for Advanced Studies.
    17. Eshagh Mansourkiaee, 2023. "Estimating energy demand elasticities for gas exporting countries: a dynamic panel data approach," SN Business & Economics, Springer, vol. 3(1), pages 1-28, January.
    18. Zouhair MRABET & Lanouar CHARFEDDINE, 2013. "Trade Liberalization, Technology Import And Employment: Evidence Of Skill Upgrading In The Tunisian Context," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 37, pages 11-36.
    19. Fidel Pérez Sebastián, 2008. "Testing Capital-Skill Complementarity Across Sectors in a Panel of Spanish Regions," Working Papers. Serie EC 2008-11, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    20. Badi H. Baltagi, 2021. "Dynamic Panel Data Models," Springer Texts in Business and Economics, in: Econometric Analysis of Panel Data, edition 6, chapter 0, pages 187-228, Springer.
    21. Jobling, Andrew & Jamasb, Tooraj, 2017. "Price volatility and demand for oil: A comparative analysis of developed and developing countries," Economic Analysis and Policy, Elsevier, vol. 53(C), pages 96-113.

    More about this item

    Keywords

    dynamic model; domestic prices; trade liberalization; panel data; speed of adjustment; Tunisia;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:inrvec:v:54:y:2007:i:1:p:148-175. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.