Computable general equilibrium analysis of agricultural liberalization: Factor mobility and macro closure

Although agriculture is a relatively small part of the U.S. economy, changes in agricultural policies may have significant economywide impacts. The nature of the impacts will depend on the degree of factor mobility and disposition of the saved farm program expenditures; and will be conditioned by existing sector-specific distortions. We present the application of a 10-sector CGE model under various factor mobility and microeconomic closure assumptions to analyze unilateral and multilateral agricultural liberalization. We demonstrate the implications of the various assumptions both for linking single country to multicountry models and for overall policy analysis.