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Book
Modelling the Impact of Trade Liberalisation
A Critigue of Computable General Equilibrium Models
Published: 2006
Pages: 63
eBook: 9780855988012
Paperback: 9780855985851
This hard-hitting research report presents a rigorous critique of the most widely used trade models based on computable general equilibrium (or CGE) models. The authors present concise analytical arguments explaining the fundamental weaknesses of typical CGE models. They show that these models tend to make unrealistic assumptions about the macro-economy and do not allow an accurate estimation of the welfare gains that trade liberalisation is supposed to induce. The report appeals for honest simulation strategies showing a variety of possible outcomes, which would enable policy-makers to assess the different scenarios for themselves.
Executive summary
Introduction and overview
Part I: CGE Models of Trade Liberalisation in Practice
Micro-economic foundations
Operational model details
Model specification and macro causality in a closed economy
Open economy (Armington) macro-economics
The Armington fiscal effect
Part II: Simulations and Results
Aim and scope
Comparing models – our model versus World Bank models
Results
Conclusions
References
Appendix 1: The Social Accounting Matrix (SAM)
Appendix 2: The Model in Algebra
Acknowledgements
Endnotes
Introduction and overview
Part I: CGE Models of Trade Liberalisation in Practice
Micro-economic foundations
Operational model details
Model specification and macro causality in a closed economy
Open economy (Armington) macro-economics
The Armington fiscal effect
Part II: Simulations and Results
Aim and scope
Comparing models – our model versus World Bank models
Results
Conclusions
References
Appendix 1: The Social Accounting Matrix (SAM)
Appendix 2: The Model in Algebra
Acknowledgements
Endnotes
Lance Taylor
Lance Taylor is the Arnhold Professor of International Cooperation and Development and Director of the Center for Economic Policy Analysis at the New School University. He has been a professor in the economics departments of Harvard and the Massachusetts Institute of Technology, as well as being a visiting professor at the University of Minnesota, the Universidade da Brasilia, Delhi University, and the Stockholm School of Economics. He moved to the New School in 1993.
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