Abstract Beginning with [Johansen (1960)], computable general equilibrium (CGE) models have been widely applied to study the impact of a variety of economic policy issues. These include changes in macroeconomic or regional economic policies such as tariff reductions, changes in labour force demographics and skill levels, the impact of epidemics and terrorist attacks, the impact...

The Commission’s conclusions concerning the welfare effects of reductions in automotive assistance are based on a faulty interpretation of their modelling results, according to this paper. Proposed reductions in automotive tariffs from their present low levels would be likely to generate a small economy-wide loss in economic welfare.