File2-page185 - Reform was a package and the whole package...

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Pavcnik (2002) Openness and Economic Performance tion of agricultural tariffs affected the prices, wages and output in the rural sector For e.g., take the agricultural workers and those who own little land in rural areas – they have to work for others and buy food – are agricultural tariffs affecting their wages or the prices they pay for food Given the paucity of experience with liberalizing agricultural tariffs and the centrality of this issue to the upcoming DOHA rounds, this work would hugely strengthen the paper as it would allow the reader to think precisely about why the effect of trade liberalization is rural speci±c Is Trade Liberalization Driving the Results? Lack of controls for omitted policy variables, e.g., Financial liberalization, entry deregulation In discussion of NTBs state that these may be highly correlated with tariff reductions – but same may be true of other policies This is important as there is a claim of capturing general equilibrium ef- fects – however these may not be due to trade liberalization
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Unformatted text preview: Reform was a package and the whole package was a surprise identica-tion strategy does not tease out trade liberalization from other effects Showing that tariff changes were unexpected and that they moved to-gether does not solve this problem Problem is that having an industrial structure that implies as a district you are exposed to tariff reductions is likely to mean that you are also exposed to industrial de-licensing, nancial liberalization etc. For e.g, having a large industry presence in a district may mean that one is exposed to tariff reductions and industrial deregulation in similar sectors both of which are going to reduce barriers to entry Could include some of these as controls (e.g. no of bank branches, en-try deregulation weighted by employment share to capture exposure of Indian district to entry deregulation) Instrument non-scaled tariffs tariff dt , which omits non-traded sectors Development Economics, LSE Summer School 2007 182...
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