Flexible and welfare-consistent tariff aggregation over exporter regions

It is all in the details: A bilateral approach for modelling trade agreements at the tariff line

“…As such, tariffs might be reduced according to the percentage of tariff lines in a sector exempted from full trade liberalisation (see Jafari and Britz (2018) for a review). Second, even if exemptions are considered, tariff aggregators can provoke systematic bias since high tariff rates tend to decrease traded volumes more than lower tariffs, resulting in underestimated average border protection (Anderson, 2009; Bach & Martin, 2001; Himics & Britz, 2016). The related bias generally increases with greater initial tariff dispersion and with larger tariff cuts.…”

“…In both cases, demand and bilateral trade information must be available and rendered consistent to the overall data base (Hertel, 2012), which is often challenging. Ultimately, neither the partial disaggregation nor the iterative PE‐CGE link scale up well as it is numerically difficult to extend them to many or all commodities (Himics & Britz, 2016). Regarding the second approach, the so‐called reference group method (Guimbard et al., 2012) is frequently applied for pre‐model aggregation.…”

Reducing unwanted consequences of aggregation in large-scale economic models - A systematic empirical evaluation with the GTAP model

“…Pelikan and Brockmeyer 2008) both with examples of combining different model types (Grant et al 2007) or using welfare-consistent aggregators (cf. Himics and Britz 2015). So far, implementation of these approaches in larger modeling exercises is still scarce.…”