The Welfare Implications of Services Liberalization in a Developing Country : Evidence from Tunisia

Author/Editor:

Nizar Jouini ; Nooman Rebei

Publication Date:

May 15, 2013

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

We propose an integrated method based on a two-sector small open economy dynamic and stochastic general equilibrium model to estimate non-tariff barriers and quantify the impact of services liberalization. The major component of trade barriers is explicitly modeled through the introduction of entry-sunk costs. Hence, liberalization is treated assuming a government's policy decision aimed at reducing those costs. Then, we estimate the model using Bayesian techniques for Tunisia and the Euro Area. The paper presents a precise quantitative evaluation of services trade barriers as the difference between entry-sunk costs in Tunisia versus the Euro Area. We find significant welfare benefits in addition to aggregate and sectoral growth gains the Tunisian economy could attain following services liberalization. Surprisingly, the goods sector is the one that benefits the most from services liberalization in the short- and long-term horizons.

Series:

Working Paper No. 13/110

Subject:

English

Publication Date:

May 15, 2013

ISBN/ISSN:

9781484367735/1018-5941

Stock No:

WPIEA2013110

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

43

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