Japan–Korea Trade Liberalization Revisited: The Role of Armington Elasticities

Kim Jiyoung, Nakano Satoshi and Nishimura Kazuhiko

No 665, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: The elasticity of substitution between foreign and domestic products, i.e., Armington elasticity, is measured by way of two-state calibration according to the temporally distant observations of the market shares, and associated price changes. Along with the sector-wise multifactor CES elasticity estimated using the linked input-output tables, we integrate domestic production of the two countries (Japan and the Republic of Korea) with bilateral trades and construct a bilateral general equilibrium model. Thereupon, we perform an economic assessment of trade liberalization between the two countries.

Keywords: International trade; Input-output tables; Tariff; South Korea; Japan; Linked Input-Output Tables; Two-state Calibration; Tariff Elimination (search for similar items in EconPapers)
JEL-codes: D57 D58 F24 (search for similar items in EconPapers)
Date: 2017-04
New Economics Papers: this item is included in nep-int
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 665. 2017-04

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