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Proposal for the Reduction of Domestic Price Variability During the Phase-In Period of Trade Liberalization (A)

Author

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  • Hayes, Dermot J.
  • Wahl, Thomas I.
  • Johnson, Stanley R.
Abstract
Countries replacing existing trade barriers with a fixed tariff may find that domestic price variability rises to politically unacceptable levels. This paper shows how the tariff-reduction formula can be modified to delay the transmission of world price variability. The importance of this modification is demonstrated by a simple two-country, one-commodity simulation model. The simulation results show that tariffication of existing EC variable levies/export subsidies would dramatically increase price variability within the European Community and that the transmission of this variability can be delayed by slightly altering the adjustment formula.

Suggested Citation

  • Hayes, Dermot J. & Wahl, Thomas I. & Johnson, Stanley R., 1992. "Proposal for the Reduction of Domestic Price Variability During the Phase-In Period of Trade Liberalization (A)," Staff General Research Papers Archive 999, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:999
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    Cited by:

    1. Possamai, Janaína Poffo & Pescador, Andresa & Mayerle, Sérgio Fernando & Neiva de Figueiredo, João, 2015. "Optimal commodity price stabilization as a multi-period spatial equilibrium problem: A supernetwork approach with public buffer stocks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 289-310.

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