Abstract
ABSTRACT A computable general equilibrium (CGE) model is constructed for the Indonesian economy. The CGE model searches for the optimal log and plywood export taxes; simulates resource allocation and rates of return to sectoral fixed factors of production under different combinations of export taxes and constraints; estimates the welfare costs of reducing log production or increasing plywood production to a given target; and demonstrates numerically how the hardwood log exporting country should respond to a higher foreign plywood import tariff Several policy implications are drawn and applied to other cases of raw material processing and trade.
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