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Journal of Economic Integration 2007 September;22(3) :637-663.
DOI: https://doi.org/10.11130/jei.2007.22.3.637
Trade-offs in Trade Liberalization: Evidence from the Philippine 2005 Tariff Changes
Helen Cabalu and 
U-Primo Rodriguez 
Curtin University of Technology Australia
University of the Philippines
Copyright ©2007 Journal of Economic Integration
ABSTRACT

This paper provides a quantitative assessment of the tariff changes implemented by the Philippines in 2005. It evaluates the impacts of these changes on the macroeconomy and on major industries and regions of the country. It also examines the impact of alternative tariff policies that the government could have considered over the period. Using TARFCOM, a computable general equilibrium model developed for the Philippines, we demonstrate the trade-off between output growth and tariff revenues in trade liberalization. Changes in tariff rates could have a significant effect on the financial position of the government. In light of government dependence on tariff revenues, the success of tariff reform is contingent upon development of alternative revenue sources and the institutional mechanisms for effective tax administration.

JEL classification: F14, F15, F17

Keywords: Trade liberalization | Computable general equilibrium | Tariff reform | Philippines
 
REFERENCE
1. Austria, M., 1992, Aggregate Productivity in the Philippine Economy, PhD dissertation, Australian National University.
2. Clarete, R., 1984, The Costs and Consequences of Trade Distortions in a Small Open Economy, PhD dissertation, University of Hawaii.
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