Regional Trading Arrangements for Chile: Do the Results Differ with a Dynamic Model?

Thomas F. Rutherford and David Tarr

Chapter 18 in Trade Policies for Development and Transition, 2017, pp 415-437 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Starting from our earlier multi-region trade model, we develop two new 24 sector small open economy (SOE) computable general equilibrium models (CGE) of Chile. One is comparative static and the other is dynamic. We evaluate the impact of Chile forming free trade agreements with either NAFTA or MERCOSUR. Our principal result is that the dynamic SOE model does not produce welfare estimates significantly different from the comparative static SOE model. Our second result is that, although the difference is small, it is possible for a fully dynamic model to produce welfare estimates for a preferential trade area that are welfare inferior than those from a comparative static model. Finally, we develop two classes of comparative steady-state models and show that it is necessary to properly calibrate these models to the dynamic steady-state equilibrium path in order to produce estimates that are not significantly biased relative to the true dynamic estimates.

Keywords: International Trade Policy; Developing Countries; Transition Countries; Growth; Poverty; Environment; Multilateral; Adjustment Costs; Autos and Steel (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2017
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Journal Article: Regional Trading Arrangements for Chile: do the Results Differ with a Dynamic Model? (2003)
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