Putting quantitative models to the test: An application to Trump's trade war

Rodrigo Adao, Arnaud Costinot and Dave Donaldson

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: The primary motivation behind quantitative modeling in international trade and many other fields is to shed light on the economic consequences of policy changes. To help assess and potentially strengthen the credibility of such quantitative predictions we introduce an IV-based goodness-of-fit measure that provides the basis for testing causal predictions in arbitrary general-equilibrium environments as well as for estimating the average misspecification in these predictions. As an illustration of how to use our IV-based goodness-of-fit measure in practice, we revisit the welfare consequences of Trump's trade war predicted by Fajgelbaum et al. (2020).

Keywords: international trade; urban economics; testing economic models (search for similar items in EconPapers)
Date: 2024-06-07
New Economics Papers: this item is included in nep-int
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Related works:
Working Paper: Putting quantitative models to the test: an application to Trump's trade war (2024)
Working Paper: Putting Quantitative Models to the Test: An Application to Trump’s Trade War (2023)
Working Paper: Putting Quantitative Models to the Test: An Application to Trump’s Trade War (2023)
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