IMPORT DEMAND AND NONTARIFF BARRIERS - THE IMPACT OF TRADE LIBERALIZATION - AN APPLICATION TO MOROCCO

Prediction of import response following liberalization measures is a particularly arduous task when extensive quantitative restrictions on imports are present. Quotas affect the responsiveness of imports to real exchange rates, tariffs and activity levels, and the combined effects of quotas and other variables are hard to gauge when data are only available for the constrained regime. In this paper, we show that theoretical results cannot unambiguously sign the effect of quotas on import responsiveness. We also estimate on Moroccan data import demand equations that take explicit account of the presence of quotas. The results suggest that quantity restrictions had a significant impact not only on the level of imports, but on their sensitivity to income and price variations as well. By estimating the demand for foreign goods under rationing we are also able to predict the behavior of imports in response to the elimination of tariff and non-tariff barriers to trade. © 1990.