Fiscal Implications of Trade Liberalization
May 1, 1995
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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.
Subject: Expenditure, Foreign exchange, Imports, International trade, Tariffs, Taxes, Trade policy
Keywords: devaluation package, Imports, liberalization cum harmonization package, liberalization package, quota relaxation, Tariffs, trade liberalization, Trade policy, WP
Pages:
48
Volume:
1995
DOI:
Issue:
050
Series:
Working Paper No. 1995/050
Stock No:
WPIEA0501995
ISBN:
9781451846911
ISSN:
1018-5941
