Effects of Trade Liberalization on the Iran\'s Economic Sectors: A Computable General Equilibrium Approach

Abstract

Computable general equilibrium (CGE) models have become a standard tool of empirical economic analysis and were extensively used to assess the impact of trade liberalization by policy analysts. In this study, the effects of imports tariff reduction as a trade liberalization index are investigated on key economic variables using computable general equilibrium approach. The data used in this study are obtained from the social accounting matrix of year 2001 in which parameters of model are calibrated accordingly. Results of simulations show that if the imports tariff rate is cut by 50% and 100% across all sectors, total supply and investment will reduce while total exports, total imports, household income and consumption will increase.

Keywords

• liberalization
• tariff
• computable general equilibrium model