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This study uses a computable general equilibrium model to analyze various policy scenarios for a carbon tax on greenhouse gas emissions from petroleum fuels and kerosene in Ethiopia. The carbon tax starts at USD 5 per ton of carbon dioxide in 2018 and rises to USD 30 per ton in 2030. Different scenarios examine the impacts with revenue recycling through a uniform sales tax reduction, reduction of labor income tax, reduction of business income tax, direct transfer back to households, and use by the government to reduce debt. Because petroleum fuels and kerosene are a relatively small part of the Ethiopian economy, the carbon tax has quite small impacts on overall economic activity while having a notable proportionate impact on greenhouse gas emissions from these energy sources, depending on the recycling scenario. The carbon tax can raise significant revenue-up to USD 800 million per year by 2030. The impacts on the poor through increased cost of living are not that large, since the share of the poor in total use of petroleum fuels and kerosene is small. In terms of income effects through employment changes, urban households tend to experience more impacts than rural households, but the results also depend on the household skill level and the revenue recycling scenario.

Carbon Tax --- CGE Model --- Computable General Equilibrium Model --- Distributional Impacts --- Environment --- Poverty Reduction --- Trade Policy

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This paper provides a forward-looking view of trade and its relevance for Lesotho's medium- and long-term development. It does this through computable general equilibrium analysis of potential impacts based on specific trade-related scenarios. The scenarios include the potential loss of American Growth and Opportunities Act preferences and preference erosion against competitors through, for example, a United States-Vietnam Free Trade Area. An immediate loss of American Growth and Opportunities Act preferences would have a significant economic impact that far exceeds that of a potential future United States-Vietnam Free Trade Area. If these preferences were suspended in 2018, Lesotho would face a loss of 1 percent in income by 2020, relative to the baseline, and exports of textiles and apparel would drop by 16 percent. The computable general equilibrium simulations stress the need to strengthen efforts to support structural transformation leading to diversification of export products and markets, improving backward and forward linkages, and lowering trade costs. The simulations also indicate that trade facilitation measures leading to an average decrease in trade costs of 2 percent per year would eliminate the negative consequences of the loss of American Growth and Opportunities Act preferences in terms of the loss of income. The changing external environment is likely to offer new opportunities to Lesotho's export industries in the medium term, including through regional integration under the Continental Free Trade Area.

AGOA --- American Growth and Opportunities Act --- CGE Model --- Computable General Equilibrium Model --- International Economics and Trade --- Trade Policy --- Trade Preferences

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The primary objective of this study is to analyze the impact on Bangladesh of increased market access in India, both within a static production structure and also identifying dynamic gains. The study shows that Bangladesh and India would both gain by opening up their markets to each other. Indian investments in Bangladesh will be very important for the latter to ramp up its exports, including products that would broaden trade complementarity and enhance intra-industry trade, and improve its trade standards and trade-handling capacity. A bilateral Free Trade Agreement would lift Bangladesh's exports to India by 182 percent, and nearly 300 percent if transaction costs were also reduced through improved connectivity. These numbers, based on existing trade patterns, represent a lower bound of the potential increase in Bangladesh's exports arising from a Free Trade Agreement. A Free Trade Agreement would also raise India's exports to Bangladesh. India's provision of duty-free access for all Bangladeshi products (already done) could increase the latter's exports to India by 134 percent. In helping Bangladesh's economy to grow, India would stimulate economic activity in its own eastern and north-eastern states. Challenges exist, however, including non-tariff measures/barriers in both countries, excessive bureaucracy, weak trade facilitation, and customs inefficiencies. Trade in education and health care services offers valuable prospects, but also suffers from market access issues. To enable larger gains, Bangladesh-India cooperation should go beyond goods trade and include investment, finance, services trade, trade facilitation, and technology transfer, and be placed within the context of regional cooperation.

CGE model --- Economic Theory & Research --- Free Trade --- FTA --- International Economics & Trade --- Trade facilitation --- Trade Law --- Trade liberalization --- Trade Policy --- Transport Economics Policy & Planning --- Bangladesh --- India

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A global computable general equilibrium model is used to analyze the economic impacts of rising oil prices with endogenously determined availability of biofuels to mitigate those impacts. The negative effects on the global economy are comparable to those found in other studies, but the impacts are unevenly distributed across countries/regions or sectors. The agricultural sectors of high-income countries, which are relatively energy intensive, would suffer more from rising oil prices than would those in lower-income countries, whereas the reverse is true for the impacts across manufacturing sectors. The impacts are especially strong for oil importers with relatively energy-intensive manufacturing and trade, such as India and China. Although the availability of biofuels does mitigate some of the negative impacts of rising oil prices, the benefit is small because the capacity of biofuels to economically substitute for fossil fuels on a large scale remains limited.

CGE model --- Energy --- Energy and Environment --- Energy Demand --- Energy Production and Transportation --- Environment --- Environment and Energy Efficiency --- Global economy --- International trade --- Oil price --- Oil Refining & Gas Industry

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As preferential trade agreements are growing in number and depth, assessment of their economic impacts has become more important to inform policy-makers facing a multitude of potential preferential trade agreements. This paper provides novel ex ante estimates of the impacts of two key preferential trade agreements currently negotiated by Indonesia, the largest economy in Southeast Asia. The paper then compares these estimates with those of other preferential trade agreements that Indonesia may negotiate in the future. To that end it, combines a dynamic, multi-country computable general equilibrium model and a microsimulation tool linking the macroeconomic results to household-level welfare. The results suggest that, among the preferential trade agreements considered, the European Union-Indonesia Comprehensive Economic Partnership Agreement (EU-CEPA) is expected to yield the largest gains for Indonesia in income, output, and exports. This result is due to a combination of large expected reductions in trade barriers and a high share of international trade between the partners. These macro effects translate into the highest expected income growth relative to the other preferential trade agreements at every point of the income distribution. However, the gains for the EU-CEPA are proportionately larger for richer households, unlike the other agreements considered. The regressive gains are mainly due to the increase in skill wage premia spurred by the additional demand for skill-intensive sectors, especially services.

CGE Model --- Distributional Impact --- Free Trade --- Free Trade Agreement --- Income Distribution --- Inequality --- International Economics and Trade --- Poverty --- Poverty and Trade --- Poverty Reduction --- Preferential Trade Agreement --- Trade Agfreement --- Trade Liberalization --- Trade Policy