What is the short-term impact of a reduction in tariffs?
Impact of Tariff Reduction (Trade liberalization effect)
Estimates the effect of a change in import price, such as change in prices when tariffs are reduced, on the domestic price of a commodity.
- Domestic and import prices over time are needed to estimate the elasticity of price transmission.
|Δ Pd / Pd||proportional change in the domestic price|
|Δ Pi / Pi||proportional change in the import price|
|ε( Pd , Pi )||elasticity of price transmission (can be estimated by calculating the ratio between percentage changes in domestic food prices and import prices over time)|
Change in domestic price due to the change in import price.
Data status: The FAO-GIEWS data will allow users to calculate this for some countries, for some commodities on a monthly basis.