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Modelling the Impact of Trade Liberalisation: A critique of computable general equilibrium models

Modelling the Impact of Trade Liberalisation: A critique of computable general equilibrium models
63 pages

Authors
Taylor, Lance
von Amin, Rudiger

Publication date
01 Jul 2006

Publisher
Oxfam International

Series
Oxfam Research Reports

Type
Research report

This hard-hitting research report presents a rigorous critique of the most widely used trade models based on computable general equilibrium (or CGE) models. The authors present concise analytical arguments explaining the fundamental weaknesses of 'typical' CGE models. They show that these models tend to make unrealistic assumptions about the macro-economy and do not allow an accurate estimation of the welfare gains that trade liberalisation is supposed to induce. The report appeals for 'honest' simulation strategies showing a variety of possible outcomes, which would enable policy-makers to assess the different scenarios for themselves.

KeywordsTrade policy

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