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Modelling the impacts of trade on employment and development: A structuralist CGE-model for the analysis of TTIP and other trade agreements

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Listed:
  • Raza, Werner
  • Taylor, Lance
  • Tröster, Bernhard
  • von Arnim, Rudi

Abstract

In recent years, a number of studies have been put forth to assess the potential economic effects of the EU-US trade agreement - the Transatlantic Trade and Investment Partnership (TTIP). Most studies report gains for the TTIP-member states. However, the commonly applied CGE models contain questionable assumptions such as full employment. In this report, we present a structuralist CGE-model for the assessment of TTIP with fundamentally different key assumptions with regard to the determination of output, income and employment. These distinct closures are applied within the standard trade liberalization setting including the reduction of tariffs and non-tariff barriers. Importantly, the model delivers results with regard to (i) macroeconomic effects including employment and wages, (ii) sectoral (20 Sectors) and (iii) regional (11 countries/regions) effects. Even though small but positive income effects are reported, the diverging results among TTIP-members, negative effects for real wages for low skill labor and the rest of the world, in particular developing countries, should be highlighted. An extensive sensitivity analysis confirms potential risks associated with TTIP.

Suggested Citation

  • Raza, Werner & Taylor, Lance & Tröster, Bernhard & von Arnim, Rudi, 2016. "Modelling the impacts of trade on employment and development: A structuralist CGE-model for the analysis of TTIP and other trade agreements," Working Papers 57, Austrian Foundation for Development Research (ÖFSE).
    • Handle: RePEc:zbw:oefsew:57
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    References listed on IDEAS

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    1. Ferdi De Ville & Gabriel Siles-Br�gge, 2015. "The Transatlantic Trade and Investment Partnership and the Role of Computable General Equilibrium Modelling: An Exercise in 'Managing Fictional Expectations'," New Political Economy, Taylor & Francis Journals, vol. 20(5), pages 653-678, October.
    2. Raza, Werner & Grumiller, Jan & Taylor, Lance & Tröster, Bernhard & von Arnim, Rudi, 2014. "ASSESS_TTIP: Assessing the claimed benefits of the Transatlantic Trade and Investment Partnership," Policy Notes 10/2014, Austrian Foundation for Development Research (ÖFSE).
    3. Lionel Fontagné & Julien Gourdon & Sébastien Jean, 2013. "Transatlantic Trade: Whither Partnership, Which Economic Consequences?," CEPII Policy Brief 2013-01, CEPII research center.
    4. Joseph Francois & Miriam Manchin & Hanna Norberg & Olga Pindyuk & Patrick Tomberger, 2013. "Reducing Transatlantic Barriers to Trade and Investment: An Economic Assessment," IIDE Discussion Papers 20130401, Institue for International and Development Economics.
    5. Pyatt, Graham, 1988. "A SAM approach to modeling," Journal of Policy Modeling, Elsevier, vol. 10(3), pages 327-352.
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    Cited by:

    1. Tröster, Bernhard & Janechová, Eva, 2021. "The long journey towards Pan-African integration: The African Continental Free Trade Area and its challenges," Briefing Papers 31, Austrian Foundation for Development Research (ÖFSE).
    2. Raza, Werner G. & Tröster, Bernhard & von Arnim, Rudi, 2016. "ASSESS_CETA: Assessing the claimed benefits of the EU-Canada Trade Agreement (CETA) [CETA: Ökonomische Bewertung der prognostizierten Effekte des EU-Kanada-Freihandelsabkommens]," Research Reports 4/2016, Austrian Foundation for Development Research (ÖFSE).
    3. Grumiller, Jan & Raza, Werner G. & Staritz, Cornelia & Tröster, Bernhard & von Arnim, Rudi & Grohs, Hannes, 2018. "The economic and social effects of the EU Free Trade Agreement with Vietnam," Research Reports 8/2018, Austrian Foundation for Development Research (ÖFSE).
    4. Grumiller, Jan & Raza, Werner G. & Staritz, Cornelia & Tröster, Bernhard & von Arnim, Rudi & Grohs, Hannes, 2018. "The economic and social effects of the EU Free Trade Agreement (DCFTA) with Tunisia," Research Reports 9/2018, Austrian Foundation for Development Research (ÖFSE).
    5. Vickie Siew Hoon Yew & Abul Quasem Al-Amin & Evelyn S. Devadason, 2020. "Labour Market Effects of Non-tariff Measures: A Computable General Equilibrium for the Food Processing Sector in Malaysia," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(3), pages 629-656, September.

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    Keywords

    trade impact assessment; non-tariff measures; trade policy;
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