The Contribution of Productivity Linkages to the General Equilibrium Analysis of Free Trade Agreements
AbstractApplied general equilibrium (AGE) analysis is often found to under-predict the increases in trade and economic growth that result from trade liberalization. One potential reason is that conventional AGE models ignore the strong correlations that exist between firm productivity, on the one hand, and exporting, importing, and investment, on the other. To examine this possibility, this study incorporates econometric evidence of these linkages into the dynamic Global Trade Analysis Project AGE model, and then uses this model to analyze a recently proposed East Asian free trade agreement. While conventional AGE modeling effects are found to predominate and be reinforced by the productivity effects, in some cases the latter actually reverse the changes predicted by the conventional effects.
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Bibliographic InfoPaper provided by Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University in its series GTAP Working Papers with number 1193.
Date of creation: 2003
Date of revision:
Note: GTAP Working Paper No. 23
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