OECD Trade Policy Papers

This series is designed to make available to a wider readership selected trade policy studies prepared for use within the OECD.

NB. No. 1 to No. 139 were released under the previous series title OECD Trade Policy Working Papers.


Mapping trade to household budget survey

A conversion framework for assessing the distributional impact of trade policies

Whether gains from trade are equally distributed within countries is the subject of a lively debate. This paper presents a novel framework to analyse the distributional effects of trade policy by linking the OECD’s CGE trade model, METRO, with consumption expenditure data from household budget surveys. Specifically, this paper describes a methodology to produce a concordance and transition matrix linking GTAP sectors to household survey classifications based on the Classification of Individual Consumption According to Purpose (COICOP). A mapping methodology is an important pre-requisite for investigating research questions concerning the influence of household behaviour changes on trade, as well as trade developments and policy on household welfare. The paper provides an illustration of the mapping of trade policy induced price changes onto household expenditures by conducting stylized tariff simulations with METRO and translating those into household expenditures by income decile for selected EU countries.


Keywords: Household expenditure microdata, Trade policy, Inequality, modelling
JEL: F14: International Economics / Trade / Empirical Studies of Trade; E21: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Macroeconomics: Consumption; Saving; Wealth; F13: International Economics / Trade / Trade Policy; International Trade Organizations; D12: Microeconomics / Household Behavior and Family Economics / Consumer Economics: Empirical Analysis; C68: Mathematical and Quantitative Methods / Mathematical Methods; Programming Models; Mathematical and Simulation Modeling / Computable General Equilibrium Models
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