Quantitative Trade Models: Developments and Challenges

Kehoe, Timothy J.; Pujolás, Pau S.; Rossbach, Jack

doi:10.1146/annurev-economics-080614-115502

Cited by 27 publications

(12 citation statements)

References 130 publications

(139 reference statements)

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“…the expansion/diversification into new products) accounts for around 60% of the increase in exports of larger economies, rather than the intensive margin (increases in existing export products), something existing trade models are poorly equipped to handle. Kehoe et al (2017) note that one of the main such shortcomings of the CGE approach relates to the need to deal with cases where initial levels of trade are low, especially if trade barriers are prohibitive.…”

Section: Lesson #2: But the Trade Impacts Are Clearer…mentioning

confidence: 99%

“…This divergence -between large trade impacts and only very modest welfare impacts -is worthy of further study. The models did so poorly, in fact, that the predictions of the models were often negatively correlated with the actual changes observed post-NAFTA (Kehoe et al, 2017). 19 One factor in which the models differ is the higher trade elasticity used in trade models.…”

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confidence: 99%

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Proving Hegel Wrong: Learning the Right Lessons from European Integration for the African Continental Free Trade Area

Mold¹

2021

JAT

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The German philosopher G.W.K. Hegel 1 once famously said that "the only thing we learn from history is…that we learn nothing from history. " This is one of those dictums which -regrettably -all too often proves to be true. However, there is no need for this to be the case. In this paper, it is argued that, while accepting that there are limitations to such comparisons -major differences exist in terms of the respective starting points of the two projects -there are nonetheless important lessons to be gleaned for the African Continental Free Trade Area (AfCFTA) from the European Union (EU) experience. More specifically, this article will make a comparison between the European Single Market Programme (SMP), which came into force on 1 January 1993, and the AfCFTA, which entered its implementation stage on 1 January 2021.Ever since independence, pan-African initiatives have been received with scepticism, both from within the continent and outside. For example, in a recent book on African economic development, Cramer et al. (2020:63-65) argue that "The swell of support for South-South cooperation and initiatives such as the AfCFTA is partly based on a pessimistic view of possible integration into the wider world economy…while African regional economic integration and greater intra-African trade may be rhetorically appealing on grounds of economic nationalism or South-South solidarity, as a blueprint for accelerated development it is a fantasy-based on exactly the same theories and conditional assumptions as a push for global free trade on comparative advantage grounds."Conflating the name 'Free Trade Area' with another wave of Washington-inspired liberalization, criticisms have been also voiced that the AfCFTA is embracing a 'neo-liberal agenda ' (e.g. Agbakwuru, 2019;Kombo, 2019). Hirschman (1963) once wrote about how Latin America was afflicted by 'fracasomania' -the belief that domestic-led initiatives were doomed to failure; it would appear that the African continent is often similarly stricken by excessive negativism.Yet criticisms of this nature reflect several key misunderstandings about what the AfCFTA is setting out to achieve. Despite its title, the AfCFTA is about much more than creating a free trade area -it is about building a framework for much deeper African regional integration and cooperation, with a view to making the continent economically stronger and more resilient (AU, 2018). It is about boosting the levels of industrialization, intraregional trade in both goods and services, and investment. In addition, the agreement contains safeguards, including protocols on competition policy, on investment, on IPR and on the free movement of people and business. In short, it is about creating a unified continental market that works to the benefit of its citizens (ECA, 2020).

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Section: Lesson #2: But the Trade Impacts Are Clearer…mentioning

confidence: 99%

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confidence: 99%

Proving Hegel Wrong: Learning the Right Lessons from European Integration for the African Continental Free Trade Area

Mold¹

2021

JAT

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“…The ex-ante analysis is simulation-based studies such as the computable general equilibrium (Walmsley et al 2020;Zeshan 2020), system dynamic (Wang et al 2020), and network analysis (Vidya & Prabheesh 2020). Although few methods in the ex-ante analysis are among the most preferred in trade analysis, these methods subject to few drawbacks such as usage of outdated data, ad-hoc simulation scenario, and numerous assumptions (Dixon & Jorgenson 2013;Raza et al 2014;Kehoe et al 2017). In addition, unlike the previous economic crisis that mostly distorts financial sectors only, the current pandemic outbreak affects the health, financial, economics, and social aspects on a totally different level (International Monetary Fund 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Thus, their studies may subject to aggregation bias and unable to explain the varying sectoral impact. In addition, lack of empirical studies used current data, as most used simulation analysis (Walmsley et al 2020;Zeshan 2020) based on the past base year and subject to simulation scenario and numerous assumptions (Dixon & Jorgenson 2013;Kehoe et al 2017). The utilisation of real trade data able to represent the actual impact of the current pandemic outbreak.…”

Section: Introductionmentioning

confidence: 99%

Dynamics of Malaysia’s Bilateral Export Post Covid-19: A Gravity Model Analysis

2021

JEM

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The recent pandemic outbreak has distorted international trade flows as the global economic activity reaches a nearstandstill due to stricter movement control imposed by most countries worldwide. Despite gaining the researcher's attention, the impact of Covid-19 on trade performances are still relatively understudied. Hence, this study aims to analyse the impact of the Covid-19 pandemic outbreak on the bilateral sectoral export for Malaysia. This study employs Poisson Pseudo Maximum Likelihood (PPML) regressions to analyse the sectoral impact in gravity models. The findings provide new perspectives on the varying impacts of the current pandemic outbreak on sectoral trade performances. The dummy variables that represent the existence of Covid-19 have significantly reduced bilateral exports for 11 sectors while increased the exports for seven sectors. Meanwhile, the severity of the Covid-19 outbreak (measured by the number of new cases and death cases) in Malaysia has negative impacts on 14 sectors. The reason for this is that when the current pandemic outbreak in Malaysia is more severe, the government has to enforce stricter movement controls that affect productions and reduce exports. On the other hand, the severity of the Covid-19 outbreak in trading partners has positive impacts on the export for 13 sectors in Malaysia. This is because the more severe pandemic outbreak in trading nations causes lower production capacities and thus higher dependence on imported goods. Differences between the impact of Covid-19 existence and severity by sectors should serve as a red flag for Malaysia's policymakers to take immediate actions to minimise the impact of the ongoing pandemic outbreak and maximise gains from sectors that have higher demand post Covid-19. The net negative impact on the export performance further reiterates the need for government intervention policies to ensure domestic firms can withstand the current tide, which then minimises the social and economic impacts and helps the economy to recover.

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“…This paper is also linked to the literature of applied general equilibrium models of trade, surveyed by Kehoe et al (2017), that is widely used to evaluate the effects of trade reforms. Recent examples are Steinberg (2019), that studies the impact of trade disruptions emerging from Brexit, and Steinberg (2020), which focuses on the consequences of the end of NAFTA.…”

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confidence: 99%

Trade and the propagation of global shocks

Ferreira

Trejos

2022

Economic Inquiry

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We study the diffusion of shocks across countries. We develop an intertemporal model of the international economy, where tradable intermediate goods are used in the production of non-tradable consumption and investment goods. International prices are endogenous, and their response to shocks triggers propagation across countries and industries. Each nation is affected differently depending on preferences, technology and endowment, which determine its comparative advantages. We use our calibrated model to perform counterfactual exercises reproducing some recent key world events. Shocks that have relatively minor aggregate effects in global output are found to impact countries and industries significantly and in opposite directions.

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Quantitative Trade Models: Developments and Challenges

Cited by 27 publications

References 130 publications

Proving Hegel Wrong: Learning the Right Lessons from European Integration for the African Continental Free Trade Area

Proving Hegel Wrong: Learning the Right Lessons from European Integration for the African Continental Free Trade Area

Dynamics of Malaysia’s Bilateral Export Post Covid-19: A Gravity Model Analysis

Trade and the propagation of global shocks

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