SHORT-RUN AND LONG-RUN INCIDENCE OF PROTECTION - THE CASE OF MADAGASCAR

The effects of trade policy interventions within a general equilibrium framework are examined. The short- and long-term incidence of protection for a particular low income developing country were measured using time series data on relative prices for the period 1974-84. The results, based on cointegration techniques, establish that nominal protection of importables was substantially lower than true protection, that true protection was lower in the long run than in the short term, and that the adjustment to equilibrium relative prices was fairly rapid in this period.