Impacts of Tariff Reduction and Mixed Fiscal Policy on the Kenyan Agricultural and Food Industry: Using the Macro CGE Model

Abstract

The objective of this study is to evaluate the impacts of tariff reduction and mixed fiscal policy on the Kenyan economy. The study assumes a close relationship between fiscal policy and economic welfare. In this regard, the 2009 Social Accounting Matrix and the Kenyan Macro Computable General Equilibrium model are used to evaluate the economic welfare and subsequent changes in both domestic production of various sectors and imports from outside economies. As a result, we found that when the target industries are food manufacturing and food processing industries, like coffee and tea, the welfare measure for households improves greatly.