Brazilian trade policies: some observed and estimated effects of the 1990s liberalization

This paper seeks to examine economic effects of Brazil's trade policy liberalization in the early-1990s. The effects in Brazil, along with those of many other countries pursuing similar reforms, have been contentious. The period in question was one of macroeconomic turmoil followed by successful stabilization, and various policies were pursued sometimes simultaneously, rendering it analytically difficult to separate out various policy effects. The paper examines the existing evidence on the country's productivity growth and employs a computable general equilibrium (CGE) model to simulate the effects of trade policy changes. The analysis suggests that the trade policy reforms resulted in significant welfare gains for Brazil.Este trabalho intenciona examinar efeitos econômicos da liberalização brasileira de políticas comerciais introduzidas durante os anos iniciais da década de 1990. Os efeitos no Brasil, como em muitos outros países seguindo reformas parecidas, tem sido contenciosos. O período em questão foi de tumulto ma-croeconômico seguido por estabilização bem-sucedida, e diversas políticas foram implementadas às vezes simultaneamente, tornando-se analiticamente difícil separar e isolar os vários efeitos. O trabalho examina a evidência existente sobre o crescimento da produtividade do País e utiliza também um modelo computável de equilíbrio geral (CGE) em simular os efeitos de mudanças em política comercial. A análise sugere que as reformas nas políticas comerciais resultaram em ganhos significativos de bem-estar para o País.(FAPERJ) Fundação de Amparo à Pesquisa do Estado do Rio de Janeir

A Forward Looking Version of the MIT Emissions Prediction and Policy Analysis (EPPA) Model

Abstract and PDF report are also available on the MIT Joint Program on the Science and Policy of Global Change website (http://globalchange.mit.edu/).This paper documents a forward looking multi-regional general equilibrium model developed from the latest version of the recursive-dynamic MIT Emissions Prediction and Policy Analysis (EPPA) model. The model represents full inter-temporal optimization (perfect foresight), which makes it possible to better address economic and policy issues such as borrowing and banking of GHG allowances, efficiency implications of environmental tax recycling, endogenous depletion of fossil resources, international capital flows, and optimal emissions abatement paths among others. It was designed with the flexibility to represent different aggregations of countries and regions, different horizon lengths, as well as the ability to accommodate different assumptions about the economy, in terms of economic growth, foreign trade closure, labor leisure choice, taxes on primary factors, vintaging of capital and data calibration. The forward-looking dynamic model provides a complementary tool for policy analyses, to assess the robustness of results from the recursive EPPA model, and to illustrate important differences in results that are driven by the perfect foresight behavior. We present some applications of the model that include the reference case and its comparison with the recursive EPPA version, as well as some greenhouse gas mitigation cases where we explore economic impacts with and without inter-temporal trade of permits.This research was supported by the U.S Department of Energy, U.S. Environmental Protection Agency, U.S. National Science Foundation, U.S. National Aeronautics and Space Administration, U.S. National Oceanographic and Atmospheric Administration; and the Industry and Foundation Sponsors of the MIT Joint Program on the Science and Policy of Global Change: Alstom Power (USA), American Electric Power (USA), A.P. Møller-Maersk (Denmark), Cargill (USA), Chevron Corporation (USA), CONCAWE & EUROPIA (EU), DaimlerChrysler AG (USA), Duke Energy (USA), Electric Power Research Institute (USA), Electricité de France, Enel (Italy), Eni (Italy), Exelon Power (USA), ExxonMobil Corporation (USA), Ford Motor Company (USA), General Motors (USA), Iberdrola Generacion (Spain), J-Power (Japan), Merril Lynch (USA), Murphy Oil Corporation (USA), Norway Ministry of Petroleum and Energy, Oglethorpe Power Corporation (USA), RWE Power (Germany), Schlumberger (USA),Shell Petroleum (Netherlands/UK), Southern Company (USA), StatoilHydro (Norway), Tennessee Valley Authority (USA), Tokyo Electric Power Company (Japan), Total (France), G. Unger Vetlesen Foundation (USA)

Regional, multilateral, and unilateral trade policies on MERCOSUR for growth and poverty reduction in Brazil

The authors estimate that the Free Trade Agreement of the Americas (FTAA), the EU-MERCOSUR agreement, and multilateral trade policy changes will all be beneficial for Brazil. The Brazilian government strategy of simultaneously negotiating the FTAA and the EU-MERCOSUR agreement, while supporting multilateral liberalization through the Doha Agenda, will increase the benefits of each of these policies. The authors estimate that the poorest households typically gain roughly three to four times the average for Brazil from any of the policies considerethe United States protects its most highly protected markets. Both the FTAA and the EU-MERCOSUR agreements are net trade-creating for the countries involved, but excluded countries almost always lose from the agreements. The authors estimate that multilateral trade liberalization of 50 percent in tariffs and export subsidies results in gains to the world more than four times greater than either the FTAA or the EU-MERCOSUR agreement. This shows the continued importance to the world trading community of the multilateral negotiations.Trade Policy,Economic Theory&Research,Rules of Origin,Environmental Economics&Policies,Payment Systems&Infrastructure,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Environmental Economics&Policies,Economic Theory&Research,Trade and Regional Integration,Trade Policy

Economic Loss to the Brazilian Regions Due to the Doha Round Failure

We build a database and model to develop general equilibrium analysis of the Brazilian economy at the level of the five macro regions. The model is multiregional at global level as also at the Brazilian level. The project is coupled to the GTAP model through disaggregation of the original Brazilian input-output matrix and trade flows and follows the GTAPinGAMS structure and syntax to generate the General Equilibrium Analysis Project for the Brazilian Economy (PAEG). The regional database is that of the GTAP version 6 and represent the 2001 world economy. We aggregate the data in seven regions plus the five Brazilian sub-regions and nineteen commodities/sectors to apply the scenario Doha Round to determine the probable losses to the Brazilian regions from the failure of the Doha round of negotiations. It is analyzed cuts in the agricultural and manufactures (NAMA proposal) import tariffs via the application of the Swiss formula, reduction in the agricultural production subsidies and elimination of agricultural export subsidies. The results show that although the regions are affected in different ways, the Doha Round failure generates losses for all Brazilian regions. The losses are greater for the Midwest and South regions, the most important for the Brazilian agricultural production.Brazilian regions, General equilibrium, Agribusiness, Trade liberalization, International Development, International Relations/Trade, F13, F15, Q17,

Trade Policy and Poverty Reduction in Brazil

Using a multi-region CGE model, we evaluate the regional, multilateral and unilateral trade policy options of MERCOSUR from the perspective of the welfare of all potential partners. In Brazil, we focus on poverty impacts. We find that the poorest households in Brazil experience percentage gains of between 1.5 to 5.5 percent of their consumption, which is about three to four times the average for Brazil. Protection in Brazil favors capital intensive manufacturing relative to unskilled labor intensive agriculture and manufacturing. So trade liberalization raises the return to unskilled labor relative to capital, thereby helping the poor.

U.S. Greenhouse Gas Cap-and-Trade Proposals: Application of a Forward-Looking Computable General Equilibrium Model

Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/).We develop a forward-looking version of the MIT Emissions Prediction and Policy Analysis (EPPA) model, and apply it to examine the economic implications of proposals in the U.S. Congress to limit greenhouse gas (GHG) emissions. We find that the abatement path and CO2-equivalent (CO2-e) price in the forward-looking model are quite similar to that of the recursive model, implying that the simulation of banking behavior in the recursive model by forcing the CO2-e price to rise at the discount rate approximates fairly well the banking result obtained with the forward-looking model. We find, however, that shocks in consumption path are smoothed out in the forward-looking model and that the lifetime welfare cost of GHG policy is lower than in the recursive model, results we would expect to find given that the forward-looking model can fully optimize over time. The forward-looking model allows us to explore issues for which it is uniquely well-suited, including revenue-recycling, early action crediting, and the role of a technology backstop. We find (1) capital tax recycling to be more welfare-cost reducing than labor tax recycling because of its long term effect on economic growth, (2) potentially substantial incentives for early action credits relative to emission levels in years after a policy is announced but before it is implemented that, however, when spread over the full horizon of the policy do not have a substantial effect on lifetime welfare cost or the CO2-e price, and (3) strong effects on estimates of near-term welfare costs depending on exactly how a backstop technology is represented, indicating the problematic aspects of focusing on short-term welfare costs in a forward-looking model unless there is some confidence that the backstop technology is realistically represented.This study received support from the MIT Joint Program on the Science and Policy of Global Change, which is funded by a consortium of government, industry and foundation sponsors

Green House Gas Mitigation Policy, Bio-fuels and Land-use Change- a Dynamic Analysis

Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy,

Assessment of U.S. Cap-and-Trade Proposals

The MIT Emissions Prediction and Policy Analysis model is applied to synthetic policies that match key attributes of a set of cap-and-trade proposals being considered by the U.S. Congress in spring 2007. The bills fall into two groups: one specifies emissions reductions of 50% to 80% below 1990 levels by 2050; the other establishes a tightening target for emissions intensity and stipulates a time-path for a "safety valve" limit on the emission price that approximately stabilizes U.S. emissions at the 2008 level. Initial period prices are estimated between $7 and$50 per ton CO2-e with these prices rising by a factor of four by 2050. Welfare costs vary from near zero to less than 0.5% at the start, rising in the most stringent case to near 2% in 2050. If allowances were auctioned these proposals could produce revenue between $100 billion and$500 billion per year depending on the case. Outcomes from U.S. policies depend on mitigation effort abroads, and simulations are provided to illuminate terms-of-trade effects that influence the emissions prices and welfare effects, and even the environmental effectiveness, of U.S. actions. Sensitivity tests also are provided of several of key design features. Finally, the U.S. proposals, and the assumptions about effort elsewhere, are extended to 2100 to allow exploration of the potential role of these bills in the longer-term challenge of reducing climate change risk. Simulations show that the 50% to 80% targets are consistent with global goals of atmospheric stabilization at 450 to 550 ppmv CO2 but only if other nations, including the developing countries, follow suit.