Global Supply Chains: towards a CGE analysis
Prema-chandra Athukorala (),
Peter Dixon and
Maureen T. Rimmer
Centre of Policy Studies/IMPACT Centre Working Papers from Victoria University, Centre of Policy Studies/IMPACT Centre
Economists have analysed global supply chains (GSC) using pure theory, case studies, econometrics and input-output calculations. We now need a new type of computable general equilibrium (CGE) model to show how GSC trade affects welfare and its distribution between and within nations. The new model must recognize: 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.
JEL-codes: F12 F60 C68 C67 (search for similar items in EconPapers)
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