Sensitivity analysis in an imperfect substitutes model of preferential trade

Kenneth Reinert ()

Journal of Economic Studies, 2014, vol. 41, issue 5, 630-643

Abstract: Purpose - – The purpose of this paper is to develop a formal representation of the imperfect substitutes model (ISM) of partial equilibrium, trade policy analysis and to conduct sensitivity analysis on the behavioral parameters of the model. Design/methodology/approach - – The paper develops an ISM in a manner that is conformable to more complex, applied general equilibrium models of trade policy analysis. Findings - – The paper presents a set of sensitivity analyses on key behavioral parameters for a better understanding of the model's properties. Research limitations/implications - – Sensitivity analysis on the values of behavioral parameters in ISMs needs to be conducted by trade policy modelers. Practical implications - – The ISM is made more explicit here than in most representations, something that will be of great use to practitioners. Originality/value - – While widely used in trade policy circles, the ISM is rarely explicitly formulated, nor the role of its behavioral parameters explored.

Keywords: Trade policy; Imperfect substitutes model; Preferential trade agreements; Trade policy analysis; Behavioural parameters; Equilibrium models (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:v:41:y:2014:i:5:p:630-643

DOI: 10.1108/JES-05-2013-0064

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