Quantitative Trade Models: Developments and Challenges

Pau Pujolas, Jack Rossbach and Timothy Kehoe

No 541, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: Applied general equilibrium (AGE) models, which feature multiple countries, multiple industries, and input-output linkages across industries in a Walrasian general equilibrium framework, have been the dominant tool for evaluating the impact of trade liberalization since the 1980s. We review and document shortcomings in the performance of AGE models in predicting the effects of past trade reforms across industries. We argue that to improve their performance in predicting the impact of trade reforms, existing models need to incorporate micro data on bilateral trade relations by industry and to better model how trade reforms lower bilateral trade costs. We use the least-traded-products methodology of Kehoe, Ruhl, and Rossbach (2015) to provide a guide on how improvements can be made.

Date: 2017
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (34)

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Related works:
Journal Article: Quantitative Trade Models: Developments and Challenges (2017)
Working Paper: Quantitative Trade Models: Developments and Challenges (2016)
Working Paper: Quantitative Trade Models: Developments and Challenges (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:541

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