This thesis contains three chapters of general equilibrium analysis of economic policy
in Thailand, which can be summarized as follows:
The first chapter is the static general equilibrium analysis of the impacts of oil prices
shock and government subsidies. The results show that oil prices shock in 2004 lowers the
GDP of the Thai economy by 0.14 percent and household welfare by Baht 26.67 billion (0.57
percent of GDP). The negative impact of oil prices shock on GDP can be alleviated by
government subsidies while the negative impact on household welfare can be mitigated only
when the cost of subsidies is financed by (i) the contraction of government consumption and
(ii) the contraction of government consumption together with uniform direct tax rates
increase. Nevertheless, subsidies policy is a regressive measure for income distribution.
The second chapter extends the analysis of oil prices shock to cover its dynamic
transition. The results show that oil prices shock lowers GDP of the Thai economy by an
approximately 1 percent in 2006-2007. The contraction of GDP is led by the reduction of
investment and private consumption. Consumption price increases by 0.24 percent in 2004
before steeply rising to 1.5 percent in 2006 -2007. The net real-export increases and
contributes positively to GDP in 2004. However, as the shock persists and accelerates, the
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net real export decreases and reinforces the contraction of other GDP components.
Household welfare decreases by 0.743 percent.
The third chapter is an analysis of the impact of trade liberalization in a revenue
constrained economy. The results show that, without revenue compensation, the impacts of
trade liberalization are consistent with the standard trade theory. In general, it raises GDP
(0.036 percent) and household welfare by Baht 6.469 billion (0.139 percent of GDP).
Government revenue decreases by Baht 20.829 billion (0.450 percent of GDP). In the context
of a revenue constrained economy, the impacts of trade liberalization significantly differ
from the case without revenue compensation. In all cases of revenue compensation,
household welfare decreases and all tax measures are less efficient than tariffs.