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Reflections on the Economic Modelling of Free Trade Agreements

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  • Lars Nilsson

Abstract

This paper discusses various aspects of economic modelling of free trade agreements (FTAs) raised directly or indirectly by high-level policymakers and the general public with an interest in trade, including explicit free trade critics. It starts with a brief description of the basic features of computable general equilibrium (CGE) models, their gradual adaptation to modern trade theory and some of the criticism they have been subject to. The paper then discusses the underlying workhorse data and points to a few critical areas which are in need of further efforts to increase the quality of model based simulations. It also describes on-going efforts and past projects that have been undertaken to improve the tools available to modelers. Some necessary practical modelling choices are discussed in terms of their impact on the modelling results followed by some thoughts on how the results of relatively complex technical undertakings such as CGE modelling exercises could be presented to a broad audience.

Suggested Citation

  • Lars Nilsson, 2018. "Reflections on the Economic Modelling of Free Trade Agreements," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 3(1), pages 156-186, June.
    • Handle: RePEc:gta:jnlgea:v:3:y:2018:i:1:p:156-186
    DOI: http://dx.doi.org/10.21642/JGEA.030104AF
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    6. Winchester, Niven & Reilly, John M., 2015. "The feasibility, costs, and environmental implications of large-scale biomass energy," Energy Economics, Elsevier, vol. 51(C), pages 188-203.
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    Cited by:

    1. Yi, Chae-Deug, 2020. "The computable general equilibrium analysis of the reduction in tariffs and non-tariff measures within the Korea-Japan-European Union free trade agreement," Japan and the World Economy, Elsevier, vol. 56(C).
    2. Chae‐Deug Yi, 2022. "Economic impacts of UK's free trade agreements with Korea, Japan, and EU as a breakthrough of Brexit," Manchester School, University of Manchester, vol. 90(5), pages 541-564, September.
    3. Lars Nilsson & Stephan Nolte, 2023. "The economic impact of the US-China trade dispute," International Economics and Economic Policy, Springer, vol. 20(4), pages 709-728, October.
    4. Florian Freund, 2021. "The role of coalitions at international tariff negotiations: a CGE perspective," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(3), pages 583-601, August.
    5. Diamantis Koutsandreas & Evangelos Spiliotis & Haris Doukas & John Psarras, 2021. "What Is the Macroeconomic Impact of Higher Decarbonization Speeds? The Case of Greece," Energies, MDPI, vol. 14(8), pages 1-19, April.
    6. Emanuele Ferrari & Thomas Chatzopoulos & Ignacio Perez Dominguez & Pierre Boulanger & Kirsten Boysen-Urban & Mihaly Himics & Robert M’barek, 2021. "Cumulative economic impact of trade agreements on EU agriculture: 2021 update," JRC Research Reports JRC123037, Joint Research Centre.
    7. Chae‐Deug Yi, 2023. "The economic and trade effects of the UK–Korea free trade agreement on the United Kingdom, Korea, Japan, China, and the European Union," Bulletin of Economic Research, Wiley Blackwell, vol. 75(2), pages 227-253, April.
    8. Christensen, Martin & Weiers, Georg & Wolski, Marcin, 2019. "The 2019 assessment of the macroeconomic effects of the European Fund for Strategic Investments with the RHOMOLO-EIB model," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 45, pages 5-15.
    9. Chae-Deug Yi, 2022. "The impact of the Japan-European Union Economic Partnership Agreement on the trade and income of Japan, the European Union, and South Korea," Asia Europe Journal, Springer, vol. 20(3), pages 329-356, September.
    10. Zembele, Adwell, 2022. "A General Equilibrium Analysis Of The Potential Effects Of The African Continental Free Trade Area On The Malawi Economy," Conference papers 333393, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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