01889cas a2200265 a 4500 AALejournalIMF009164 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451865646 1018-5941 BD-DhAAL BD-DhAAL Choudhri, Ehsan. Trade Liberalization, Macroeconomic Adjustment, and Welfare : Unifying Trade and Macro Models / Ehsan Choudhri, Hamid Faruqee, Stephen Tokarick. Washington, D.C. : International Monetary Fund, 2006. 1 online resource (26 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Trade liberalization leads to long-run gains, but it can also involve costly short-run macroeconomic adjustment. The paper explores the relative importance of these effects within a dynamic general equilibrium model that captures key elements of both international trade and macroeconomic models. The welfare effect of trade liberalization is decomposed into a steady-state efficiency gain and a transitional loss associated with wage-price stickiness. Our estimates show that the transitional loss is small relative to the steady-state gain, and tends to be lower under flexible as compared to fixed exchange rates. We also show that the loss can be reduced further by a flexible price-level targeting policy rule. Mode of access: Internet Faruqee, Hamid. Tokarick, Stephen. IMF Working Papers; Working Paper ; No. 2006/304 Full text available on IMF http://elibrary.imf.org/view/journals/001/2006/304/001.2006.issue-304-en.xml IMF e-Library