Global Supply Chains: Towards A Computable General Equilibrium Analysis

Prema-chandra Athukorala, Peter Dixon and Maureen Rimmer

Economic Papers, 2018, vol. 37, issue 3, 198-219

Abstract: Economists have analysed GSCs using pure theory, econometrics and input–output calculations. We now need a new type of CGE model to show how GSC trade affects welfare and its distribution between and within nations. The new model must recognise: fragmentation of production; scale economies; intermediate inputs that cross national borders multiple times embodied in products at different stages of completion; and decision‐making by global agents. We describe a prototype that incorporates these features and gives interpretable results not attainable with a standard CGE model. We discuss steps to move from the prototype to a policy‐relevant model.

Date: 2018
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