The impact of tariff reduction on Bangladesh economy: a computable general equilibrium assessment

Hoque, Serajul (2005): The impact of tariff reduction on Bangladesh economy: a computable general equilibrium assessment.

Abstract

This paper explores the effects of tariff reduction on macroeconomic indicators and sectoral output in Bangladesh using a computable general equilibrium approach. The simulation results indicate that a reduction in all tariffs expands gross domestic product and generates employment, which suggests that tariff cuts have a short-run stimulatory effect on economic growth. The industries that experience the greatest positive effects on their output and employment are export-oriented industries. There are also positive effects on the suppliers to these industries. Lightly-protected industries that rely heavily on imported intermediate inputs exhibit robust expansion, benefiting from a cost reduction as a result of the removal of protection. However, highly-protected, import-competing industries suffer a contraction in output and employment as they face increased competition from imports due to the liberalisation of trade.

• Item Type: MPRA Paper
• Language: English
• Keywords: Trade liberalisation, computable general equilibrium model, Bangladesh
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations

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