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GTAP Resource #2089

"Global Merchandise Trade Reform: Comparing results with the LINKAGE Model"
by van der Mensbrugghe, Dominique

The LINKAGE global trade model has a relatively long lineage with its original inception found in the RUNS and Walras models of the late 1980s. The former was in fact the basis for one of the first quantifications of the Uruguay Round using the then still relatively new global trade models. Global trade models have made significant progress since then—in particular on the data side where most models use the common GTAP database , better computers and software, more realistic specification, and a better understanding of the underlying mechanisms and limitations of these models. Global trade models are often still at the heart of the global trade policy debate, even as they abstract from the truly detailed negotiations that occur during the lengthy trade rounds, such as the current Doha negotiations. Opponents and proponents of free trade use the results of the models selectively and not always with a clear understanding of what the numbers represent nor the limitations of these models. And despite the progress cited above, there is still considerable scope for improving the models—from all angles—but particularly as regards estimates for key parameter values such as factor mobility and trade responsiveness.

This paper will address some of these uncertainties. In particular, it will explore the impact of using the (static) recursive dynamic as opposed to the comparative static version, the role of factor mobility—particularly land (overall supply and mobility across sectors) and labor (fixed versus flexible wages), and the role of the trade elasticities. The analysis will be done in close collaboration with the GTAP and Mirage teams. We will harmonize on a basic set of assumptions—aggregation of sectors and regions, pre-simulation shocks, the global shock, comparative static—and where possible on a common set of elasticities—factor mobility, trade, etc. Each will then explore different alternatives to reveal the key drivers behind the results. The intended outcome is a roadmap for the global modelers (and their econometrician friends) where to concentrate resources to provide more robust results.

Resource Details (Export Citation) GTAP Keywords
Category: 2006 Conference Paper
Status: Published
By/In: Presented at the 9th Annual Conference on Global Economic Analysis, Addis Ababa, Ethiopia
Date: 2006
Created: van der Mensbrugghe, D. (5/1/2006)
Updated: van der Mensbrugghe, D. (5/1/2006)
Visits: 2,997
No keywords have been specified.

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