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Consequences of price volatility in evaluating the benefits of liberalisation

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  • Boussard, Jean-Marc

Abstract

Many computable general equilibrium models have been set up recently, in order to assess the benefits of trade liberalisation, especially in agriculture. Although figures magnitudes differ from one model to another, they cannot reach any other conclusion than positive benefits. On the other hand, historical experience shows that liberalisation, far from being a new idea, has been tried at several occasions during the two last centuries, repeatedly ending in crisis, and hasty return to various forms of protection. A possible explanation could be in the comparative static approach of most liberalisation proponents, and their neglect of dynamic aspects. Especially, because risk is necessarily tied with unfulfilled expectations, it should play a decisive role in modelling. A new model is developed along this line, showing the possibility of a chaotic price regime, which would prevent full liberalisation to be feasible.

Suggested Citation

  • Boussard, Jean-Marc, 2006. "Consequences of price volatility in evaluating the benefits of liberalisation," MPRA Paper 4467, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:4467
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    File URL: https://mpra.ub.uni-muenchen.de/4467/1/MPRA_paper_4467.pdf
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    References listed on IDEAS

    as
    1. Boussard, J.M. & Gerard, F. & Piketty, M.G. & Christensen, A.K. & Voituriez, T., 2004. "May the pro-poor impacts of trade liberalisation vanish because of imperfect information?," Agricultural Economics, Blackwell, vol. 31(2-3), pages 297-305, December.
    2. Antoine Bouët & Jean‐Christophe Bureau & Yvan Decreux & Sébastien Jean, 2005. "Multilateral Agricultural Trade Liberalisation: The Contrasting Fortunes of Developing Countries in the Doha Round," The World Economy, Wiley Blackwell, vol. 28(9), pages 1329-1354, September.
    3. Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications - Books, The World Bank Group, number 6889.
    4. Ferreira FIlho, Joaquim Bento de Souza & Horridge, Mark, 2005. "The Doha Round, Poverty and Regional Inequality in Brazil," Conference papers 331332, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Boussard, Jean-Marc & Gerard, Francoise & Piketty, Marie Gabrielle & Ayouz, Mourad & Voituriez, Tancrede, 2006. "Endogenous risk and long run effects of liberalization in a global analysis framework," Economic Modelling, Elsevier, vol. 23(3), pages 457-475, May.
    6. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    7. Boussard, Jean-Marc, 1996. "When risk generates chaos," Journal of Economic Behavior & Organization, Elsevier, vol. 29(3), pages 433-446, May.
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    Cited by:

    1. Zewdie Habte Shikur, 2020. "Agricultural policies, agricultural production and rural households’ welfare in Ethiopia," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-21, December.

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    More about this item

    Keywords

    globalisation; risk ; volatility ; modelling ; trade ; agriculture ; Doha ; WTO;
    All these keywords.

    JEL classification:

    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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