Computational Analysis of the Government of India’s Market Opening Initiatives

Abstract

The process of major economic reforms undertaken in the Indian economy has now completed eight years of implementation. The unilateral reform measures in the industrial and trade policies of India along with reforms in the tax regime represent a significant departure from the policy framework of the preceding decades. Chapter 1 evaluates the comparative static effects of selected trade and domestic policy reforms on trade, output, domestic prices, economic welfare, and the intersectoral allocation of resources using a computable general equilibrium (CGE) model of the Indian economy. The results indicate that import liberalization enhances the welfare of the economy, and that the effect becomes further enlarged if exports are also liberalized simultaneously. This is particularly true of the agricultural sectors. The rationalization of the existing structure of indirect taxes (mainly excise) and subsidies is expected to further benefit the factors of production and enhance overall welfare. We also report in Chapter 2 on efforts to link the India CGE model with the CGE Michigan Model of World Production and Trade in order to analyze the effects of the interactions of policy changes between India and its major trading partners, including the United States. JEL Classifications: C68, D58, F13, F14

10 Figures and Tables

Cite this paper

@inproceedings{Deardorff2000ComputationalAO, title={Computational Analysis of the Government of India’s Market Opening Initiatives}, author={Alan V. Deardorff and Drusilla K. Brown and Robert M. Stern}, year={2000} }