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AGRICULTURE, TRADE, AND POVERTY IN MOROCCO 175


contains 57 sectors and 96 countries and regions. Because the GTAP database includes only two Maghreb countries, Morocco and Tunisia, it was augmented with social accounting matrixes for Algeria, Libya, and Mauritania.6 Two versions of MIRAGE were used in this analysis:


• The static version assumed perfect competition in all sectors, and the trade policy changes were assumed to occur instantaneously in one period. The results reflect changes generated from various trade integration sce- narios relative to a benchmark representing the state of the world before the tariff changes. It was a long-run simulation in that it assumed all sec- tors had fully adjusted to the new trade policy and a new equilibrium had been reached. The loss in tariff revenue from import liberalization was offset by increases in lump-sum taxes.


• The dynamic version of the model has a sequential recursive set-up (with the results in each year feeding into the simulation for the next year), and capital supply was modified each year due to depreciation and invest- ment. In this way, the dynamic version could capture the effects of trade liberalization on investment and economic growth. In addition, some of the sectors were modeled under imperfect competition: textiles, wearing apparel, petroleum and coal products, and all services with the exception of trade and transport. The dynamic MIRAGE model generated a baseline extending from 2001 to 2020 based on World Bank projections of GDP and population levels through 2020. In this application of the model, the time- line for the implementation of changes in tariffs spanned 2006–2016, and the simulation results reflected deviations from the baseline at the end of the period, 2020.7


Although MIRAGE did not simulate the effect of policy simulations on differ- ent types of households (there was only one representative agent whose pro- pensity to save was constant), it traced these effects across labor categories. The model assumed full employment of factors and wage flexibility. Skilled labor was the only factor that was perfectly mobile, while unskilled labor was imperfectly mobile between agricultural and nonagricultural sectors accord- ing to the ratio of remunerations between the two sectors. The static version of the model was used to simulate the impact on Morocco of various options of trade integration: (1) liberalization within the AMU; (2) in addition to (1), bilateral liberalization between each Maghreb country and the E.U.; (3) In addition to (1), bilateral liberalization between


6 The input-output data for the three missing Maghreb countries were constructed from input-


output data for GTAP countries with a similar economic structure (Thomas et al. 2008). 7 See Decreux and Valin (2007) for a more detailed description of the MIRAGE model.


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