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GTAP Resources: Resource Display

GTAP Resource #5816

"Modelling Trade and Other Economic Interactions between Countries in Baseline Projections"
by Bekkers, Eddy, Alessandro Antimiani, Caitlyn Carrico, Dorothee Flaig, Lionel Fontagne, Jean Foure, Joseph Francois, Ken Itakura, Zornitsa Kutlina-Dimitrova, William Powers, Bert Saveyn, Robert Teh, Frank van Tongeren and Marinos Tsigas


Abstract
This paper examines the way trade is modelled in the construction of baseline projections with dynamic computable general equilibrium models. Current approaches in the field are compared, reviewed, and assessed; simulations are conducted on some of the most important choices in modelling trade in dynamic projections; and recommendations are formulated on best practices emerging from the comparison exercise and areas in need of further research and spending of resources on data collection. Simulations are conducted on the size of trade elasticities, the way the trade balance is modelled (macroeconomic closure), trade growth, and value chains and multi-regional input-output structure. Other topics scrutinized are the modelling of zeros, the role of energy prices, modelling new technologies and new types of trade policies (trade in data and digitalization), phasing in of future trade policies, and the role of capital income and remittances. We conclude that there is relative consensus about the use of nested Armington preferences, whereas different teams model the trade balance very differently. The discrepancy between baseline trade growth and historical trade growth is not considered in most models though highly relevant. Research efforts, both in terms of modelling and data collection, should be allocated to a better coverage of other items on the current account (capital income, remittances) and the inclusion of net foreign debt and asset positions, projecting trade growth based on historical patterns, and better tools to model the rapidly growing digital economy.


Resource Details (Export Citation) GTAP Keywords
Category: 2019 Conference Paper
Status: Published
By/In: Presented at the 22nd Annual Conference on Global Economic Analysis, Warsaw, Poland
Date: 2019
Version:
Created: Powers, W. (4/15/2019)
Updated: Powers, W. (4/15/2019)
Visits: 676
- Baseline development
- Calibration and parameter estimation
- Dynamic modeling


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