Aggregation Across Each Nation: Aggregator Choice and Macroeconomic Dynamics

Agr gation entre pays: choix d agr gateur et dynamiques macro conomiques

Noëmie Lisack, Rana Sajedi and Simon Lloyd

Working papers from Banque de France

Abstract: We study the implications of trade aggregation in an infinite-horizon economy with multiple countries, asking whether there is a role for alternatives to the Armington aggregator in a wide range of workhorse open-economy macroeconomics models. We show analytically that the first-order dynamics of the model are entirely captured by a few sufficient statistics. Over and above these statistics, the precise choice of functional form for the trade aggregator is irrelevant. This result has the following implications. For given steady-state trade elasticities and expenditure shares, any aggregator that is homogeneous of degree one is equivalent to the Armington aggregator at first order. Similarly, aggregators that are homogeneous of arbitrary degree are equivalent to a simple generalisation of the Armington aggregator, for given steady-state trade elasticities and expenditure shares. In models with more than two countries, alternative aggregators can play a role by allowing for steady-state differences in bilateral trade elasticities across different country pairs, which the Armington aggregator rules out.

Nous tudions les implications de l agr gation entre biens changeables dans un mod le multi-pays en horizon infini, et si des alternatives l agr gateur Armington ont un r le jouer dans les mod les typiques de macro conomie ouverte. Nous montrons analytiquement que les dynamiques de premier ordre du mod le sont enti rement d termin es par un petit nombre de statistiques suffisantes. Au-del de ces statistiques, le choix pr cis de la forme fonctionnelle de l agr gateur du commerce n a pas d effet. Ce r sultat a les cons quences suivantes. lasticit s de commerce et parts de d penses l tat stationnaire donn es, tout agr gateur homog ne de degr 1 est quivalent l agr gateur Armington au premier ordre. De m me, les agr gateurs homog nes de degr arbitraire sont quivalents une simple g n ralisation de l agr gateur Armington, tant donn es les lasticit s de commerce et parts de d penses l tat stationnaire. Dans les mod les avec plus de deux pays, les agr gateurs alternatifs peuvent jouer un r le en permettant aux lasticit s bilat rales de commerce entre diff rentes paires de pays de prendre des valeurs diff rentes l tat stationnaire, ce qui n est pas possible avec l agr gateur Armington.

Keywords: International Trade; Open-economy Macroeconomics; Armington Aggregator; Elasticity of Trade; commerce international; macro conomie ouverte; agr gateur Armington; lasticit de commerce (search for similar items in EconPapers)
JEL-codes: F00 F10 F41 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2022
New Economics Papers: this item is included in nep-int and nep-opm
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Working Paper: Aggregation across each nation: aggregator choice and macroeconomic dynamics (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:894

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