Policies affecting resource allocation across tradable sectors and those affecting the incentives to produce tradable activities are key determinants of macroeconomic balance and growth. Computable general equilibrium models have made significant contributions to both types of policies. With advancements in computing power and software, these models have become easy to implement and are now widespread. The question then is when and how to formulate them to avoid the ‘black box’ syndrome.This book seeks to address these issues through carefully selected essays that analyse how to model general equilibrium linkages in a single economy, across developing and developed economies, and across both micro and macro policies. Micro policies examined include tariffs quotas and VERs, the choice of taxes to maximize government revenue, migration and remittances, and the political economy of tariff setting. Applications on macro policies cover capital inflows, real exchange rate determination, and the modeling of the effects of adjustment policies on income distribution.The book provides insights on the development of a family of models for diverse policy choices, focusing on the ways to model the following: links between tradable and non-tradable activities, labor markets, and portfolio choices given limited capital mobility. Selected essays are all inspired by specific policy problems, including the adaptation to external shocks (i.e. oil), consequences of capital inflows, determinants of migration and associated remittances, the productivity of foreign aid, and rent-seeking activities under trade regimes with non-price trade restrictions. Examples in this book lay out the theoretical foundations, alongside a variety of applications, to help formulate coherent and transparent models for policy analysis. Archetype economies are extensively used to show how differences in economic structure influence the effects of policies. Graduate students and policy analysts interested in modeling will find this a useful compendium of studies.

Table of Contents:
Capturing Economy-Wide Linkages: A General Equilibrium Analysis of Foreign Exchange Shortages in a Developing Economy (K Dervis, J de Melo and S Robinson); Exchange-Rate-Based Disinflation, Wage Rigidity and Capital Inflows: Tradeoffs for Chile (J de Melo, T Condon and V Corbo); Product Differentiation and the Treatment of Foreign Trade in Computable General Equilibrium Models of Small Economies (J de Melo and S Robinson); Trade Policy and Resource Allocation in the Presence of Product Differentiation (J de Melo and S Robinson); Productivity and Externalities: Models of Export-led Growth (J de Melo and S Robinson); Computable General Equilibrium Models for Trade Policy Analysis in Developing Countries: A Survey (J de Melo); Productivity Growth, External Shocks and Capital Inflows in Chile During 1977 - 81: A General Equilibrium Analysis (T Condon, V Corbo and J de Melo); Adjustment and Income Distribution: A Counterfactual Analysis (F Bourguignon, W Branson and J de Melo); Archetype Economies: Modelling the Effects of Protection in a Dynamic Framework (J de Melo and K Dervis); Trade Adjustment Policies and Income Distribution in Three Archetype Developing Economies (J de Melo and S Robinson); Alternative Routes to Development (H Chenery, J Lewis, J de Melo and S Robinson); Distributional Effects of Adjustment Policies: Simulations for Archetype Economies in Africa and Latin America (F Bourguignon, J de Melo and A Suwa); Lobbying, Counterlobbying, and the Structure of Tariff Protection in Poor and Rich Countries (O Cadot, J de Melo and M Olarreaga); Globalisation and Migratory Pressures from Developing Countries: A Simulation Analysis (R Faini, J M Grether and J de Melo); General Equilibrium Aspects of Price and Non-Price Distortions: Distortions in the Factor Market: Some General Equilibrium Estimates (J de Melo); Industrial Organization Implications of QR Trade Regimes: Evidence and Welfare Costs (T Condon and J de Melo); Trade Policy and Industrial Organization: Evidence from Korea (J de Melo and D Roland-Holst); An Evaluation of Neutral Trade Policy Incentives Under Increasing Returns to Scale (J de Melo and D Roland-Holst); Welfare Costs of US Quotas in Textiles, Steel and Autos (J de Melo and D Tarr); VERs Under Imperfect Competition and Foreign Direct Investment: A Case Study of the U.S. Auto VER (J de Melo and D Tarr); Do Wage Distortions Justify Protection in the U.S. Auto and Steel Industries? (J de Melo and D Tarr); Revenue Raising Taxes: A General Equilibrium Evaluation of Alternative Taxation in U.S. Petroleum Industries (J de Melo, J Stanton and D Tarr); Market Access and Welfare Under Free Trade Agreements: Textiles under NAFTA (O Cadot, C Carrere, J de Melo and A Portugal-Perez).