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Impacts of trade reform: sensitivity of model results to key assumptions

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  • Ernesto Valenzuela
  • Kym Anderson
  • Thomas Hertel

Abstract

The WTOÂ’s Doha Development Agenda has generated demand for estimates of the potential economic consequences of global trade reform. Recent improvements in the GTAP dataset have provided a much better representation of tariff restrictions as of 2001. However, despite its use by most global trade modelers, substantial differences in results emerge from different computable general equilibrium exercises. To help understand these differences, this paper examines the sensitivity of full global and regional trade liberalization results from the GTAP model, using the GTAP version 6.1 database, to different assumptions about factor mobility, fiscal neutrality, macro-economic closure, and trade (Armington) elasticities.
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  • Ernesto Valenzuela & Kym Anderson & Thomas Hertel, 2008. "Impacts of trade reform: sensitivity of model results to key assumptions," International Economics and Economic Policy, Springer, vol. 4(4), pages 395-420, February.
    • Handle: RePEc:kap:iecepo:v:4:y:2008:i:4:p:395-420
    DOI: 10.1007/s10368-007-0094-4
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    Cited by:

    1. Meade, Birgit & Muhammad, Andrew, 0. "New International Evidence on Food Consumption Patterns: A Focus on Cross-Price Effects Based on 2005 International Comparison Program Data," Amber Waves, United States Department of Agriculture, Economic Research Service, issue 03, April.
    2. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2013. "Estimating Effects of Price-Distorting Policies Using Alternative Distortions Databases," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 877-931, Elsevier.
    3. Regmi, Anita & Seale, James L., Jr., 2010. "Cross-Price Elasticities of Demand Across 114 Countries," Technical Bulletins 59870, United States Department of Agriculture, Economic Research Service.
    4. Stone, Susan & van Tongeren, Frank, 2013. "Trade Model Development at the OECD," Conference papers 332408, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Andrew Mold & Rodgers Mukwaya, 2015. "The Effects of the Tripartite Free Trade Area: Towards a New Economic Geography in Southern, Eastern and Northern Africa?," Discussion Papers 2015-04, University of Nottingham, CREDIT.
    6. Mérette Marcel & Georges Patrick, 2010. "Demographic Changes and the Gains from Globalisation: An Analysis of Ageing, Capital Flows, and International Trade," Global Economy Journal, De Gruyter, vol. 10(3), pages 1-39, October.
    7. Dorothee Flaig & Harald Grethe & Scott McDonald & Khalid Siddig, 2012. "Intersectoral factor movements: do adjustment costs matter for welfare?," EcoMod2012 4418, EcoMod.
    8. Athukorala, Premachandra & Riedel, James, 1994. "Demand and Supply Factors in the Determination of NIE Exports: A Simultaneous Error-Correction Model for Hong Kong: A Comment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1411-1414, November.
    9. Jean-Christophe Bureau & Sébastien Jean, 2013. "International Agricultural Trade and Negotiations : Coping with a New Landscape," FOODSECURE Working papers 8, LEI Wageningen UR.
    10. McCleery, Robert & DePaolis, Fernando, 2014. "So you want to build a trade model? Available resources and critical choices," Economic Modelling, Elsevier, vol. 40(C), pages 199-207.
    11. Muhammad, Andrew & Meade, Birgit Gisela Saager & Regmi, Anita & Seale, James L., 2011. "International Evidence on Food Consumption Patterns: An Update Using 2005 International Comparison Program Data," Technical Bulletins 120252, United States Department of Agriculture, Economic Research Service.
    12. Anderson, Kym & Valenzuela, Ernesto & van der Mensbrugghe, Dominique, 2009. "Welfare and Poverty Effects of Global Agricultural and Trade Policies Using the Linkage Model," Agricultural Distortions Working Paper Series 52785, World Bank.
    13. Muhammad, Andrew & Meade, Birgit Gisela Saager, 2011. "International Evidence on Food Consumption Patterns: An Update Using 2005 International Comparison Program Data," Technical Bulletins 120252, United States Department of Agriculture, Economic Research Service.
    14. Dandres, Thomas & Gaudreault, Caroline & Seco, Pablo Tirado & Samson, Réjean, 2014. "Uncertainty management in a macro life cycle assessment of a 2005–2025 European bioenergy policy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 36(C), pages 52-61.
    15. Hillberry, Russell & Hummels, David, 2013. "Trade Elasticity Parameters for a Computable General Equilibrium Model," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1213-1269, Elsevier.
    16. Schürenberg-Frosch, Hannah, 2015. "We couldn't care less about Armington elasticities - but should we? A systematic analysis of the influence of Armington elasticity misspecification on model results," Conference papers 332593, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. James Scott, 2012. "Squeezing the state: tariff revenue, state capacity and the WTO’s Doha Round," Global Development Institute Working Paper Series 16912, GDI, The University of Manchester.
    18. Dandres, Thomas & Gaudreault, Caroline & Tirado-Seco, Pablo & Samson, Réjean, 2012. "Macroanalysis of the economic and environmental impacts of a 2005–2025 European Union bioenergy policy using the GTAP model and life cycle assessment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(2), pages 1180-1192.
    19. Flaig, Dorothee & Grethe, Harald & McDonald, Scott, 2013. "Imperfect labour mobility in a CGE model: Does factor specific productivity matter?," Conference papers 332388, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    20. Németh, Gabriella & Szabó, László & Ciscar, Juan-Carlos, 2011. "Estimation of Armington elasticities in a CGE economy-energy-environment model for Europe," Economic Modelling, Elsevier, vol. 28(4), pages 1993-1999, July.
    21. Olekseyuk, Zoryana & Schürenberg-Frosch, Hannah, 2016. "Are Armington elasticities different across countries and sectors? A European study," Economic Modelling, Elsevier, vol. 55(C), pages 328-342.
    22. Morey, Mitchell, 2016. "Preferences and the home bias in trade," Journal of Development Economics, Elsevier, vol. 121(C), pages 24-37.
    23. James Scott & Rorden Wilkinson, 2012. "Changing of the guard: expert knowledge and ‘common sense’ in the Doha Development Agenda," Global Development Institute Working Paper Series 16612, GDI, The University of Manchester.
    24. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2012. "Estimating effects of price-distorting policies using alternative distortions databases," Conference papers 332172, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    25. Stefan KÜHN & Christian VIEGELAHN, 2019. "Foreign trade barriers and jobs in global supply chains," International Labour Review, International Labour Organization, vol. 158(1), pages 137-167, March.

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    More about this item

    Keywords

    Trade policy reform; WTO; Agricultural trade; Computable general equilibrium; C68; F17; Q17;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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