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The impacts of trade liberalization and macroeconomic instability on the Brazilian economy

Bittencourt, Mauricio Vaz Lobo

Abstract Details

2004, Doctor of Philosophy, Ohio State University, Agricultural, Environmental and Development Economics.
After the creation of the Mercosur (Argentina, Brazil, Paraguay and Uruguay), in the beginning of the 1990s, new free trade agreements began to be debated between Mercosur and other countries. Traditional trade theory predicts that trade liberalization reallocates resources according to comparative advantage, reduces waste, and lowers the price of imported goods in a more transparent economic regime, with less lobbying activities, and exports not only grow rapidly, but also become more diversified. Most economists also share that open countries fare better in the long run than do closed ones, but the short run impacts from trade liberalization can harm the poor. Since Brazil is one of the countries with larger inequality in the distribution of income, with high levels of poverty and regional differences, this study takes these concerns seriously by assessing the economic impacts of a reduction in import tariffs on poverty and distribution of income, identifying a combined policy that can reduce possible negative impacts from trade reform on the poor, through a single-country multi-regional computable general equilibrium model (CGE) applied to Brazil. The main findings show that poverty and regional income inequality can be reduced through combined trade and tax policies. In recent years, countries like Argentina and Brazil have experienced many different economic crises due to their own domestic instabilities, which have contributed to delayed market opening in these countries, and have threatened the evolution of new trade agreements. This study also emphasizes the lack of macroeconomic policy coordination between Mercosur and the Free Trade Area of Americas (FTAA) countries, notably the exchange rate policy through the impact of real bilateral exchange rate volatility on trade. Therefore, a sectoral gravity model is estimated to evaluate not only the role played by the lack of macroeconomic policy coordination, but also to better evaluate the patterns of trade in the Mercosur and in the proposed FTAA. The overall results show that the reduction in the level of exchange rate volatility can increase bilateral trade, and gradual reduction in the level of tariffs and increase in countries’ income are also important pro-trade variables.
Donald Larson (Advisor)
262 p.

Recommended Citations

Citations

  • Bittencourt, M. V. L. (2004). The impacts of trade liberalization and macroeconomic instability on the Brazilian economy [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1101328593

    APA Style (7th edition)

  • Bittencourt, Mauricio. The impacts of trade liberalization and macroeconomic instability on the Brazilian economy. 2004. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1101328593.

    MLA Style (8th edition)

  • Bittencourt, Mauricio. "The impacts of trade liberalization and macroeconomic instability on the Brazilian economy." Doctoral dissertation, Ohio State University, 2004. http://rave.ohiolink.edu/etdc/view?acc_num=osu1101328593

    Chicago Manual of Style (17th edition)