The effects of changing C.E.T rates: the Barbados case

Author(s): Mascoll, Clyde A (1992)

Created 20 Jul, 1992
Categories Working Papers
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This paper analyzes the empirical implications of changing the existing Common External Tariff (CET) rates on sectoral protection, government revenue and the cost of living within the Barbadian economy. The empirics are retrieved from the World Bank's Software for Industrial, Trade and Incentives Analysis (SINTIA-T) program which provide a systematic description of the nominal protection resulting from official tariffs and other import duties. The results indicate that lowering the maximum rate of the CET reduces the level of protection particularly in the manufacturing sector; in addition both government revenue and the cost of living may fall. Therefore any decision to lower the CET rates will have to consider the relative trade-offs among diversed economic objectives. On the other hand, the decision may be pursued simply within the spirit of the 'hemispheric trade liberalisation'. (Also published in Journal of Economic Studies 42 (4) 1993; pp. 185-215. For presentation at the XXIV Regional Programme of Monetary Studies Annual Conference, Central Bank of Bahamas, October 1992)

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