Agriculture Reference
In-Depth Information
16 For further discussion of the role and representation of skill-capital complementarity,
see Tyers and Yang (2000).
17 Bach et al. (1996) offer one approxmaton that requres the constructon of a set of
equvalent producton taxes and subsdes and the rebalancng of the economc database
to reflect these. Walmsley et al. (2001) reconstruct their global database to separate
out producton for exports and domestc sales. An nvestment of ths magntude s too
great for our more llustratve purpose.
18 Consequently, the rates in Table A9.3 tend to reflect the proportional changes in powers
of tariffs implied by Ianchovichina and Martin and the magnitudes as detailed in the
protocol.
19 To the extent that some of the tariff reductions may be phased in over several years,
our analyss wll tend to overstate the economc mpacts n the short run.
20 For a full enumeration, two more cases were considered: fixed tax rates or fixed
government deficit with a floating exchange rate. These cases were excluded to simplify
the presentaton .The results are avalable from the authors.
21 The net factor ncome component of the current account s zero at the outset because
that s the assumpton emboded n the constructon of the orgnal database.
22 To see these at least partially offsetting gains in allocative efficiency, it is necessary to use
a multi-commodity, general equilibrium framework such as that used in this paper.
23 It is, at least in part, for this reason that CPI-targeting countries set targets of 2-3 per
cent per year. This avoids GDP price deflation following trade reforms or negative external
shocks.
24 The trade reform s a postve shock and so t should not be surprsng that an open
capital account is advantageous. Such openness would, however, risk outflows following
negative shocks and it is this risk that justifies the controls in the first place. If the risk
of capital flight is to be minimised, controls on the composition of investment may be
required. These simulation results simply confirm that such controls should do as little
as possible to inhibit the inflow of investment following positive shocks.
References
Bach, C.F., Martin M., and Stevens, J.A., 1996. 'China and the WTO: tariff
offers, exemptions and welfare implications',
Weltwirtschaftliches Archiv
132(3):409-431.
Francois, J. and Spinanger, D., 2001. 'Greater China's accession to the WTO:
implications for international trade/production and for Hong Kong',
report to the Hong Kong Trade Development Council, December.
Gehlhar, M.J., 2002. 'Hong Kong's re-exports', in Dimaranan, B.V., and
McDougall, R.A. (eds),
Global Trade, Assistance and Production: the
