A price endogenous numerical general equilibrium model of world trade is used to analyze terms of trade issues in the North-South debate. Seven regions are identified, the U.S., EEC, Japan, Other Developed, OPEC, New Industrialized, and Less Developed Countries. The model is benchmarked to a global 1977 micro consistent data set. In the central case analysis, protectionist trade policies in the North inflict an annual welfare loss on the South of around 30 billion dollars per year with an associated terms of trade deterioration of around 9%. The annual welfare cost to the South from northern trade restrictions is somewhat larger than annual North-South aid flows. Protection in the South, and the potential terms of trade impacts of differential growth, are also analyzed.

John Whalley, A Simulation Experiment into the Numerical Properties of General Equilibrium Models of Factor Market Distortions, The Review of Economics and Statistics, Vol. 59, No. 2 (May, 1977), pp. 194-203

IN the empirical literature on market interferences a variety of numerical techniques have been used to analyse competitive equilibria which are not directly observable. Harberger (1963, 1966), and Johnson and Mieskowski (1970), for instance, in their analyses of factor market distortions in the United States economy use a mixture of differential calculus and linearization assumptions to estimate efficiency losses and distributional impacts of particular market interferences. Acceptance seems to be implied in these procedures of the reliability of approximate methods for calculating unobservable equilibria. This issue of reliability forms the subject matter of the present paper.' A recent joint paper (1972) examined the robustness of Harberger's results (1966) when a competitive for the United States economy in the absence of distortionary taxation was calculated using a procedure for the computation of competitive equilibria due to Scarf (1967, 1969, 1973). The results for particular parameterizations suggested that the gain in simplicity of approximate methods may in some circumstances counterbalance the precision of more refined computational devices. These results, however, were obtained for a problem of small dimensionality and limited complexity, and the comparison between Harberger's results and true general solutions was made only on the basis of one summary statistic. In addition, the approximate solution device used by Harberger (1966) does not correspond to conventional notions of either or general analysis. It is thus of some importance that the comparison between general solutions and various forms of analysis be carried further before any conclusions on computational experience are used as a guide in other contexts. These issues are taken up here in the context of a-particular model which allows different forms of analysis to be used and compared to general solutions. The results presented are put forward as evidence on computational experience. This paper considers a general model of the United Kingdom economy used in recent work on an assessment of tax changes in the United Kingdom economy (1973). Using this model the gain2 to the United Kingdom from the abolition of the distortionary features of capital income taxation is calculated by various methods and compared to the general solution. Section II presents a characterization of competitive equilibria for an economy with taxation used in a recent paper by Shoven and Whalley (1973) which underlies the United Kingdom tax model. As no explicit statement of partial equilibrium analysis is to be found in the literature, two alternative characterizations of such procedures which are later applied to the model, are devel-

This paper numerically investigates the significance of rents for both the welfare costs and the optimal design of commodity taxes using a general-equilibrium model calibrated to 1986 Canadian data. In the data we use, Ricardian rents are concentrated in agriculture and utilities, with market structure rents concentrated in manufacturing. Different types of rents have different implications for the welfare cost of taxes, and hence also for appropriate tax design. Ricardian rents lower the cost of taxes; rents supported by imperfect competition (with no free entry) raise the cost of taxes; rents supported by regulation generate rent-seeking costs, and if taxed improve resource allocation. Model results show a markedly nonuniform optimal tax structure, and a substantial influence of the treatment of rents on the pattern of optimal tax rates by commodity.

A bstract-An eight-region numerical general equilibrium model of global trade is used to investigate the impacts of various geographically discriminatory trade policy arrangements (GDAs) on regional trade and welfare. Results suggest that the important factors determining gains and losses in any GDA are such issues as whether initial levels of protection are asymmetric, the relative sizes of participating regions, and the pattern of trade between participating and non-participating countries. Results also appear to confirm the implication of Wonnacott and Wonnacott (1981) that the gain from reducing a partner's tariff is typically a more important consideration in evaluating potential benefits from a customs union, than the traditional concerns of trade creation and trade diversion.

This paper evaluates calculations of net fiscal incidence, using an applied general equilibrium model of Australia into which public goods are incorporated. Results indicate that it is inappropriate to regard the redistributive impacts of government policies as a zero sum game. For large reductions in public goods provision and taxes, the dominant effect is the foregone consumer surplus from suboptimal public goods provision. In addition, the redistributive pattern of small charges are quite different from large charges. Marginal and average net fiscal incidence, thus, need to be clearly separated, a point not emphasized in existing literature.