Effects of Trade Liberalization on Key Variables of Agricultural Sector in Iran: Computable General Equilibrium

Major changes in economic field and international trade and their impact on economic situation of countries, especially LCDs, sheds light on the importance of the linkage between countries development process and international economy forces and factors. Computable general equilibrium (CGE) models have become a standard tool of empirical economic analysis and were extensively used to assess the impact of trade liberalization. In this study, the effects of import tariff reduction as a trade liberalization index on key economic variables were investigated using CGE. Needed data were obtained from the social accounting matrix of 2001 in which parameters of model were calibrated accordingly. Results of simulation showed that the import tariff reductions of agricultural sector, causes employment, capital stock, production and export of agricultural sector to reduce, however, import tariff reductions of non-agricultural sectors and all sectors causes production to reduce and employment and export to increase.