Fiscal Implications of Trade Liberalization

Author/Editor:

David Bevan

Publication Date:

May 1, 1995

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:

This paper examines the relationship between trade liberalization and the budget deficit, which depends on the specifics of country’s economic structure, and the trade regime which is being liberalized. It relates some popular but incomplete approaches to assessing this issue (such as analysis of the foreign exchange budget) to a more comprehensive approach using an applied general equilibrium model. The argument is illustrated using data from the most recent of a sequence of abortive planned liberalizations in Kenya, as well as a number of stylized illustrations. The conclusions are not only that liberalization may be budget enhancing, but that in certain circumstances it may be strongly so.

Series:

Working Paper No. 95/50

Subject:

English

Publication Date:

May 1, 1995

ISBN/ISSN:

9781451846911/1018-5941

Stock No:

WPIEA0501995

Format:

Paper

Pages:

48

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