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Consistent Trade Policy Aggregation

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  • James E. Anderson

Abstract

Most empirical policy work requires the aggregation of policies. Trade policy aggregation exemplifies the aggregation problem poignantly, with thousands of highly dispersed trade barriers. This paper provides methods of policy aggregation that are consistent with two common objectives of empirical work. One is to preserve real income. The other is to preserve the real volume of activity in the parts of the economy being aggregated. Both objectives must be achieved for consistent multi-country policy modeling. An application to India shows that the standard atheoretic method of aggregation overstates India's real income by around 3 times the global gains from free trade.

Suggested Citation

  • James E. Anderson, 2008. "Consistent Trade Policy Aggregation," NBER Working Papers 14046, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:14046
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    References listed on IDEAS

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    1. James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012200, January.
    2. Lawrence H. Goulder & Roberton C. Williams III, 2003. "The Substantial Bias from Ignoring General Equilibrium Effects in Estimating Excess Burden, and a Practical Solution," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 898-927, August.
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    1. repec:laf:wpaper:201101 is not listed on IDEAS
    2. Will Martin & Kym Anderson, 2007. "The Doha agenda and agricultural trade reform: the role of economic analysis," Agricultural Economics, International Association of Agricultural Economists, vol. 37(s1), pages 77-87, December.
    3. Kym Anderson, 2016. "Contributions Of The Gatt/Wto To Global Economic Welfare: Empirical Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 30(1), pages 56-92, February.
    4. van der Mensbrugghe, Dominique, 2013. "Modeling the Global Economy – Forward-Looking Scenarios for Agriculture," Handbook of Computable General Equilibrium Modeling, Elsevier.
    5. 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, Elsevier.
    6. Narayanan, Badri G. & Hertel, Thomas W. & Horridge, J. Mark, 2010. "Disaggregated data and trade policy analysis: The value of linking partial and general equilibrium models," Economic Modelling, Elsevier, vol. 27(3), pages 755-766, May.
    7. repec:bla:worlde:v:40:y:2017:i:10:p:2255-2276 is not listed on IDEAS
    8. David Laborde & Will Martin & Dominique van der Mensbrugghe, 2017. "Measuring the Impacts of Global Trade Reform with Optimal Aggregators of Distortions," Review of International Economics, Wiley Blackwell, vol. 25(2), pages 403-425, May.
    9. Narayanan, Badri & Thomas Hertel & Mark Horridge, 2010. "Linking Partial and General Equilibrium Models: A GTAP Application Using TASTE," GTAP Technical Papers 3192, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    10. Antoine Bouet & Valdete Berisha-Krasniqui & Valdete Berisha-Krasniqui & Carmen Estrades & David Laborde, 2011. "Trade and investment in Latin America and Asia : Potential perspectives from further integration," Larefi Working Papers 1101, Larefi, Université Bordeaux 4.
    11. Berisha-Krasniqi, Valdete & Bouet, Antoine & Estrades, Carmen & Laborde, David, 2011. "Trade and investment in Latin America and Asia: Lessons from the past and potential perspectives from further integration," IFPRI discussion papers 1060, International Food Policy Research Institute (IFPRI).
    12. Bouët, Antoine & Berisha-Krasniqi, Valdete & Estrades, Carmen & Laborde, David, 2012. "Trade and investment in Latin America and Asia: Perspectives from further integration," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 193-210.
    13. Himics, Mihály & Britz, Wolfgang, 2016. "Flexible and welfare-consistent tariff aggregation over exporter regions," Economic Modelling, Elsevier, vol. 53(C), pages 375-387.

    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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