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China's potential future growth and gains from trade policy bargaining: Some numerical simulation results

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  • Li, Chunding
  • Whalley, John

Abstract

Numerical simulation analysis of bargaining solutions is little developed in existing literature. In this paper, we use a numerical general equilibrium model which captures China and her major trading partners and examine the outcomes of trade policy bargaining solutions (bargaining over tariffs and financial transfers) over time, and then measure both absolute and relative gains to China from trade bargaining. These measurements are important for policy making. Our simulation results indicate that China's welfare gain from trade bargaining will increase over time if countries keep their present higher GDP growth rates for several decades, but there are major difference when using different bargaining solution concepts. These differences have not been noted in existing literature but have an intuitive explanation. Our results also indicate that if China jointly bargains along with India, Brazil and other developing countries with the OECD, and when we use PPP to adjust China's relative GDP size China's gain will further increase.

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  • Li, Chunding & Whalley, John, 2014. "China's potential future growth and gains from trade policy bargaining: Some numerical simulation results," Economic Modelling, Elsevier, vol. 37(C), pages 65-78.
    • Handle: RePEc:eee:ecmode:v:37:y:2014:i:c:p:65-78
    DOI: 10.1016/j.econmod.2013.10.023
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    Cited by:

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    3. Hübler, Michael & Pothen, Frank, 2017. "Trade-induced productivity gains reduce incentives to impose strategic tariffs," Economic Modelling, Elsevier, vol. 61(C), pages 420-431.

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    More about this item

    Keywords

    Bargaining solutions; Welfare gain; General equilibrium; Numerical simulations;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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