Armington Parameter Estimation for a Computable General Equilibrium Model: A Database Consistent Approach

Xiao-guang Zhang and George Verikios
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Xiao-guang Zhang: Australian Productivity Commission

No 06-10, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: Substitution elasticities in policy-oriented computable general equilibrium (CGE) models are key parameters for model results since they determine behaviour in these models. As Dawkins et al. (2001) observe, the current situation with regard to the elasticities available for use in these models is poor. We focus on an important type of elasticity that is widely used in CGE models with international trade: the so-called ‘Armington’ elasticities (Armington, 1969). These elasticities are well known for their critical role in determining model results. We present an alternative approach to quantifying Armington elasticities which is consistent across historical databases. The approach is used to derive elasticities from successive databases of a commonly-used global CGE model, the GTAP model.

Keywords: Armington assumption; computable general equilibrium models; estimating Armington paprmeters (search for similar items in EconPapers)
JEL-codes: C68 D58 F17 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2006
New Economics Papers: this item is included in nep-cmp
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:uwa:wpaper:06-10

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