Partial- and General-Equilibrium Measures of Trade Restrictiveness
14 Pages Posted: 1 Nov 2010
New partial-equilibrium forms of the Trade Restrictiveness Index and the Mercantilist Trade Restrictiveness Index have recently been used by the World Bank and others. In this paper we examine the bias in the partial-equilibrium forms due to the neglect of general-equilibrium effects. We propose “semi-general-equilibrium” measures that capture those general-equilibrium effects due to vertical input–output relations without the need for a computable general-equilibrium model. These measures also incorporate nontariff measures. Australian data are used to compute the semi-general-equilibrium measures. These estimates indicate that the partial-equilibrium forms generally underestimate the true value of the indices, and by a large margin in some cases.
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