 Comparing Trade Balance Closures in the GTAP-Recursive Dynamic (GTAP-RD) Model FrameworkMary Burfisher and Wen Jin Yuan No 333221, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Abstract: This paper explores the importance of macro closure rules governing the balance of trade and foreign savings in the results of model simulations using a recursive dynamic, multi-country CGE model. It first presents a stylized shock in which a single country experiences a total output productivity shock, and compares results when global capital is assumed to move across regions until expected rates of return are equalized, versus a closure that fixes regions' real trade balance. Results between the two closures differ in magnitudes and in many cases differ in sign as both macro and micro adjustments occur to accommodate the alternative closure rules. After illustrating these mechanisms, the paper provides a simulation of the Trans-Pacific Partnership, comparing selected results under two closure rules. Results signal the importance of understanding the macroeconomic policies being pursued by a country and reflecting those in the appropriate choice of trade balance closure. Keywords: International; Relations/Trade (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:333221 Access Statistics for this paper More papers in Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Contact information at EDIRC. |
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