The impact of tariff reduction on poverty in Zimbabwe : a CGE top-down approach

Abstract

This paper uses a relatively new approach to quantify the effects of trade liberalisation on poverty. It relies on the combination of a standard, social accounting, matrix-based, computable general equilibrium model and household micro-data. These two tools are used sequentially in order to simulate the impact of trade policy reform. This framework enables the decomposition of the effects of trade liberalisation, which in turn allows for an analysis of alternative social policy packages. The methodology is applied to Zimbabwe for illustration. The results show that poverty is reduced by tariff-reduction, although the poor households get the least benefits.