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GTAP Resource #4888

"The economic impact of eliminating domestic preference margins in GPA countries: a ‘phantom’ tax modelling assessment"
by Kutlina-Dimitrova, Zornitsa

Public procurement is gaining importance on the trade negotiation agenda, both under the aegis of the WTO and at bilateral level in various preferential trade agreements. In terms of impetus from trade policy measures, the potential of committing public procurement markets is deemed important in an environment where tariffs are globally already at very low level. In spite of the size and importance of international public procurement markets there is a lack of economic analysis of the impact stemming from public procurement markets liberalisation in a general equilibrium modelling context.

This paper aims at filing-in this gap. For this purpose the paper uses the public procurement database developed by the GTAP centre for a project commissioned by DG TRADE and the public procurement modelling extension of the standard GTAP model. The modelling extension follows the database extension and introduces a phantom tax modelling approach whose main notion is that ‘home-biased’ government procurement policies can be modelled through a subsidy accruing to domestic producers and a concurrent tax levied on imports. The exact match in terms of revenue flows ensures that there are no tax revenues gains/losses from a change in domestic preference margins. This is a novel trade cost modelling approach deviating from the AMS/TMS traditional chocks as these are not appropriate for simulating the impact stemming from a reduction in domestic preferences in public procurement markets.

Resource Details (Export Citation) GTAP Keywords
Category: 2016 Conference Paper
Status: Published
By/In: Presented at the 19th Annual Conference on Global Economic Analysis, Washington DC, USA
Date: 2016
Created: Kutlina-Dimitrova, Z. (3/25/2016)
Updated: Kutlina-Dimitrova, Z. (3/25/2016)
Visits: 1,555
- Domestic policy analysis
- Multilateral trade negotiations
- Non-Tariff barriers
- The GTAP Data Base and extensions
- European Union
- North America

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