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

May 15, 2013

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Nizar Jouini, and Nooman Rebei. The Welfare Implications of Services Liberalization in a Developing Country: Evidence from Tunisia, (USA: International Monetary Fund, 2013) accessed September 19, 2024

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.

Subject: Economic sectors, International trade, Service exports, Services sector, Trade barriers, Trade in services, Trade liberalization

Keywords: Aggregate output, Bayesian estimation, Entry-sunk cost, Euro Area, Exchange rate, General equilibrium, Global, Goods liberalization, Goods market, Goods production, Good-sector production growth, Liberalization, Liberalization impact, Liberalization shock, Middle East, North Africa, Open economy, Sensitivity analysis, Service exports, Service liberalization, Service sector inflation, Service sector production, Services output, Services sector, Trade barriers, Trade in services, Trade in services and goods, Trade liberalization, Tunisia, Welfare analysis, WP

Publication Details

Pages:

43
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/110
Stock No:

WPIEA2013110
ISBN:

9781484367735
ISSN:

1018-5941

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