The Welfare Implications of Services Liberalization in a Developing Country: Evidence from Tunisia
IMF Working Papers, May 15, 2013
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- The Welfare Implications of Services Liberalization in a Developing Country: Evidence from Tunisia
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Bibliographic details
- Authors: Nizar Jouini, Nooman Rebei
- Published: May 15, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484367735.001
Methodology and Model
- Two-sector small open economy dynamic and stochastic general equilibrium (DSGE) model.
- Major component of trade barriers explicitly modeled through the introduction of entry-sunk costs.
- Liberalization modeled as a government policy decision aimed at reducing entry-sunk costs.
- Model estimated using Bayesian techniques for Tunisia and the Euro Area.
- Services trade barriers quantified as the difference between entry-sunk costs in Tunisia versus the Euro Area.
Key Findings and Quantitative Results
- The paper presents a precise quantitative evaluation of services trade barriers as the difference between entry-sunk costs in Tunisia versus the Euro Area.
- Significant welfare benefits are found for Tunisia following services liberalization.
- Aggregate and sectoral growth gains are identified for the Tunisian economy following services liberalization.
- The goods sector benefits the most from services liberalization in both short- and long-term horizons (surprising cross-sectoral impact highlighted).
Policy Implications and Recommendations
- Services liberalization should be approached through policies that reduce entry-sunk costs for service providers.
- Government action to lower entry-sunk costs can generate welfare improvements and both aggregate and sectoral growth.
- Consideration of cross-sectoral effects is important: liberalizing services can yield substantial gains for goods production.