Macroeconomic impacts of customs tariffs on Armington's composite and transfer exports/domestic goods in Algeria: A CGEM approach

Authors

  • Walid Laib Bordj Bou Arreridj University. LIZENRU Laboratory, Algeria
  • Khadidja Bouaita Bordj Bou Arreridj University. LIZENRU Laboratory, Algeria

Keywords:

Customs Tariffs Computable General Equilibrium (CGE) Model, Armington Model, Trade Policy, Economic Diversification

Abstract

This paper focuses on the macroeconomic consequences of customs tariffs in Algeria presented through a CGE model. Focusing on the Armington approach, which allows for product differentiation according to the country of origin, the research considers means of differences in composite factor prices, supply prices, and price of Armington's composite good over five sectors: agriculture, industry, hydrocarbons, services, and building/public works. Results indicate that the impact of import tariffs is generally detrimental to domestic prices, domestic production, and domestic competitiveness in all sectors, hydrocarbons included, which recorded the worst plunges. The results point to the conspicuous need for trade policy reforms, economic diversification, and domestic competitiveness enhancements in order to avert negative impacts and help promote sustained growth. This research calls attention to the significance of CGE models in the policy-making processes, with a strong focus on Algeria’s economic problems.

References

Armington, P. S. (1969). A theory of demand for products distinguished by place of production. IMF Staff Papers, 16(1), 159-178.

Balistreri, E. J., Böhringer, C., & Rutherford, T. F. (2022). General equilibrium assessment of trade policies: Recent advances. Journal of Economic Perspectives, 36(4), 23-46.

Böhringer, C., & Rutherford, T. F. (2023). Tariff wars and welfare impacts: A computable general equilibrium approach. Economic Modelling, 116, 105912.

Decaluwé Bernard et al. (2001). La politique économique du développement et les modèles d’équilibre général calculable (les presses de l’université de Montréal, Ed.).

Fofana Ismail. (2007). Elaborer une Matrice de Comptabilité Sociale Pour l'Analyse d’Impacts des Chocs et Politiques Macroéconomiques. Réseau de Recherche Sur Les Politiques Economiques de Réduction de La Pauvreté (PEP).

Go, D. S., Lofgren, H., Ramos, F. M., & Robinson, S. (2016). Estimating parameters and structural change in CGE models using a Bayesian cross-entropy estimation approach. Economic Modelling, 52, 790–811. https://doi.org/10.1016/j.econmod.2015.10.017

Hertel, T. W. & T. M. E. (1997). Global Trade Analysis: Modeling and Applications. Cambridge University Press., 5–94

Hertel, T. W., Hummels, D., Ivanic, M., & Keeney, R. (2019). How confident can we be in CGE-based assessments of free trade agreements? Economic Modelling, 81, 15-23.

Hosoe, N., Gasawa, K., & Hashimoto, H. (2010). Textbook of computable general equilibrium modeling: programming and simulations. Springer.

International Monetary Fund (IMF) (2022). The macroeconomic impacts of trade policies. IMF Economic Review. Retrieved from https://www.imf.org/en/Publications/IMF-Economic-Review

LAIB, W. (2022). Algeria's Economic Complexity and Export Competitiveness: What Can Algeria Gain Knowledge From Industrial Nations' Experiences? Economics Researcher's Journal, Volume 9, Numéro 1, Pages 444-458.

LAIB, W. (2024). A multi-objective approach to defining effective policies to release the structural change in a computable general equilibrium model. The journal of contemporary issues in business and government, Vol. 30 No. 2 .

Lofgren, H. (Economist), Harris, R. L., & Robinson, Sherman. (2002). A standard computable general equilibrium (CGE) model in GAMS. International Food Policy Research Institute.

Organisation for Economic Co-operation and Development (OECD) (2023). Trade and Tariff Analysis. OECD Trade Policy Reports. https://www.oecd.org/trade/

Taylor, L. (2016). CGE applications in development economics. Journal of Policy Modeling, 3(3), 495–514. https://doi.org/10.1016/j.jpolmod.2016.02.010

Trade.gov. (2023). Algeria - Import Tariffs. https://www.trade.gov/country-commercial-guides/algeria-import-tariffs:contentReference[oaicite:0]{index=0}.

Trade.gov. (2023). Algeria: import tariffs. https://www.trade.gov/country-commercial-guides/algeria-import-tariffs:contentReference[oaicite:0]{index=0}.

United Nations Conference on Trade and Development (UNCTAD) (2023). Global Tariff Trends 2023

USDA Foreign Agricultural Service. (2023). Algeria: Grain and Feed Annual. https://fas.usda.gov/data/algeria-grain-and-feed-annual:contentReference[oaicite:1]{index=1}.

USDA Foreign Agricultural Service. (2023). Algeria: Grain and Feed Annual. Retrieved https://fas.usda.gov/data/algeria-grain-and-feed-annual:contentReference[oaicite:1]{index=1}.

USDA Foreign Agricultural Service. (2023). Algeria: Grain and Feed Annual. https://fas.usda.gov/data/algeria-grain-and-feed-annual: content Reference[oaicite:0]{index=0}.

World Bank. (2023). Algeria Economic Update. https://www.worldbank.org/en/country/algeria/overview:contentReference[oaicite:2] {index=2}.

World Bank. (2023). Algeria Economic Update. https://www.worldbank.org/en/country/algeria/overview:contentReference[oaicite:2] {index=2}.

World Bank. (2023). Algeria Economic Update. https://www.worldbank.org/en/country/algeria/overview: content Reference[oaicite:1] {index=1}.

World Trade Organization. (2023). World Tariff Profiles 2023. https://www.wto.org/english/res_e/publications_e/world_tariff_profiles23_e.htm.

World Trade Organization. (2023). World tariff profiles 2023. https://www.wto.org/english/res_e/publications_e/world_tariff_profiles23_e.htm.

World Trade Organization. (2023). World Tariff Profiles 2023. https://www.wto.org/english/res_e/publications_e/world_tariff_profiles23_e.htm.

Published

2024-12-15

How to Cite

Laib, W., & Bouaita, K. (2024). Macroeconomic impacts of customs tariffs on Armington’s composite and transfer exports/domestic goods in Algeria: A CGEM approach. International Journal of Economic Perspectives, 18(12), 2626–2648. Retrieved from https://ijeponline.org/index.php/journal/article/view/798

Issue

Section

Peer Review Articles