Essays in trade, taxation and external shocks in a small open economy

This paper aims to looks at the impact of food and financial crisis in Pakistan. We use a linked computable general equilibrium and microsimulation model to study the decline in exports, rise in import price of food and increase in remittances during the crises period. Our results reveal that the decline in exports was particularly harsh for the high income earners however led to an increased availability of food supply domestically which ultimately increased food consumption. On the contrary, import price of food led to a general increase in prices across the board, which drastically deteriorated the consumption and nutritional status of the poor. The persistent increase in remittances during the times of high food inflation provided some relief with poverty increasing less than half of what it would have been otherwise. The paper also discusses the policy response required in order to cushion the impact of future crises.