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A multicountry, multisector general equilibrium model system with endogenous trade

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  • Vincent, David P.

Abstract

Our aim in this paper is to describe the theory of a multicountry multisector general equilibrium model system whose specification preserves as far as is possible; (i) the considerable amount of 10 detail, (ii) the numerous prospects for relative price induced substitution and (iii) the operational flexibility, now found in the most advanced of the single country models. To do this, we take as our reference point the Australian ORANI model (Dixon et al (1982)) which is the most comprehensive (in terms of its treatment of within country 10 linkages and substitution prospects) and flexible (in terms of its ease of application to a range of policy shocks) of the single country models developed to date. Starting with a somewhat simplified version of the ORANI system (which describes intersectoral linkages within one economy and commodity trade flows - exports from it to the rest of the world and imports from the rest of the world to the demand categories in which they are used -) we extend it to a c+1 block system describing intersectoral linkages between the c countries into intermediate input and final demand categories of each country and trade flows from each of the countries to the c+1 block (which depicts.an aggregation of all remaining countries). Such a framework would.be suitable for studying effects of internal (originating in any of the c countries) and external (to the group of c countries) shocks on macroeconomic and sectoral variables in each country and on trade flows between countries. Given its considerable attention to regionalised (country to country) flows at the 10 level the system is especially applicable to a group of c countries between which the degree of economic integration is high. The most obvious example is the 10 member customs union of the EEC. Other examples include the five member countries of ASEAN, the developed countries (USA, Japan, Australia) of the so-called Pacific rim and the trans-Tasman economic integration between Australia and New Zealand.

Suggested Citation

  • Vincent, David P., 1983. "A multicountry, multisector general equilibrium model system with endogenous trade," Kiel Working Papers 174, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:174
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    References listed on IDEAS

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    1. H. Dick & E. Gerken & D.P. Vincent, 1982. "The benefits of the CAP for developing countries: A case study of the Ivory Coast," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 9(2), pages 157-181.
    2. Hanoch, Giora, 1971. "CRESH Production Functions," Econometrica, Econometric Society, vol. 39(5), pages 695-712, September.
    3. Dick, Hermann & Gupta, Sanjeev & Mayer, Thomas & Vincent, David, 1982. "Indexation of UNCTAD core commodity prices by buffer stocks or export quotas? : A comparison of the benefits for two developing economies," Journal of Development Economics, Elsevier, vol. 11(3), pages 379-401, December.
    4. Dick, Hermann & Gupta, Sanjeev & Vincent, David P. & Voigt, Herbert, 1981. "Comparing the effects of the second OPEC oil price shock on income and resource allocation in four oil-poor developing economies: Ivory Coast, Kenya, South Korea, Turkey," Kiel Working Papers 123, Kiel Institute for the World Economy (IfW Kiel).
    5. Dick, Hermann & Gupta, Sanjeev & Mayer, Thomas & Vincent, David P., 1982. "The Short-Run Impact of fluctuating primary commodity prices on three developing economies: Colombia, Ivory Coast and Kenya," Kiel Working Papers 155, Kiel Institute for the World Economy (IfW Kiel).
    6. Deardorff, Alan V. & Stern, Robert M., 1981. "A disaggregated model of world production and trade: An estimate of the impact of the Tokyo Round," Journal of Policy Modeling, Elsevier, vol. 3(2), pages 127-152, May.
    7. Vincent, David P., 1983. "Exchange rates, monetary policy and wages: A case study of Chile," Kiel Working Papers 164, Kiel Institute for the World Economy (IfW Kiel).
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