The Impact Of Economic Partnership Agreement (epa) And Counter Fiscal Policy Measures For Ethiopia A Recursive Dynamic Computable General Equilibrium Model

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As a Growth and Transformation Plan (GTP), the Ethiopian government has plannedrnto conclude the Economic Partnership Agreement (EPA) with European Union (EU)rnand joining common Market for Eastern and Southern Africa- Free Trade Arearn(COMESA-FTA). Thus, in the study we have shown endeavor to examine therneconomy-wide effects of concluding those agreements. To attain the stated objectives,rna recursive dynamic computable general equilibrium (CGE) model is used as anrnimportant analytical tool. As a main data base the model is calibrated with anrnupdated version of 2005106 Social Accounting Matrix (SAM). There were threernindividual and two combined simulations.rnAccording to the simulation results, following tariff reduction, with exception ofrninvestment and government income, almost all of the macroeconomic indicators,rnsectoral output and welfare indicators have shown improvement. Similarly, in therncombined simulation, tariff reduction and direct tax rate adjustment, though thernpercentage of improvement is lower for some variables all of the variables havernrecorded a positive change. Unlike the above simulations, the simulation combiningrntariff reduction together with sales tax rate adjustment has shown a negative changernin some of macroeconomic indicators, sectoral output and welfare indicators. Inrnconcluding, in those simulations which included sales tax rate adjustment has broughtrnadverse effect on most of the economic variables. Therefore, from the welfare point ofrnview, the implication of our study is that, comparing the two compensating measures,rnit is beneficial to apply direct tax rate adjustment together with tariff reduction

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The Impact Of Economic Partnership Agreement (epa) And Counter Fiscal Policy Measures For Ethiopia A Recursive Dynamic Computable General Equilibrium Model

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