Reflections on the Economic Modelling of Free Trade Agreements

Nilsson, Lars

doi:10.21642/jgea.030104af

Cited by 15 publications

(9 citation statements)

References 32 publications

(39 reference statements)

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“…Lastly, one must acknowledge the common criticisms levied at the CGE analysis using the GTAP model. For instance, Nilsson () notes that the impact of reduced uncertainty FTAs bring about is not fully captured. Neither is the impact of liberalisation of foreign investment that comes from participation in FTAs accounted for or the potential of increased productivity effects associated with greater competition incentives to innovate from enhanced competitive pressure.…”

Section: Resultsmentioning

confidence: 99%

“…However, Nilsson () explains why, even if one manages to quantify the value of NTBs, the implementation of this reduction is not straightforward in the GTAP model and is fraught with problems and assumptions. In addition, Limao and Tovar () show that tariff commitments in trade agreements can actually increase the likelihood and restrictiveness of NTBs, so it is hard to say if this might happen for the RCEP.…”

Section: Resultsmentioning

confidence: 99%

“…This paper uses a dynamic computable general equilibrium (CGE) modelling framework, more specifically the Global Trade Analysis Project (GTAP) model for analysis. Using this widely used instrument in trade policy analysis (Nilsson, ), this paper adds to the existing literature in three ways. First, studies on the impacts of the RCEP such as Cheong and Tongzon (), Lee and Itakura (), Li, Wang, and Whalley (), Kikuchi, Yanagida, and Vo (), Petri et al () and Rahman and Ara () have used ad hoc assumptions and conjectures about tariff reductions.…”

Section: Introductionmentioning

confidence: 99%

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Can the Regional Comprehensive Economic Partnership minimise the harm from the United States–China trade war?

Mahadevan

Nugroho

2019

World Economy

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Using ex post tariff schedules for the first time, it was found that the global gains provided by the Regional Comprehensive Economic Partnership (RCEP) are not enough to overcome the negative impacts of the United States–China trade dispute. While trade tensions cause China's welfare loss to be more than twice as large as the United States, they provide some trade diversion to RCEP members. But of concern is if India successfully delays the conclusion of the RCEP even by a year, there will be a global loss of US$17.7 billion. The RCEP is also beneficial for the emerging economy of Vietnam and the high‐tariff‐imposing Korean economy. The results obtained here are, however, conservative as reduction in non‐tariff barriers and other positive spillover effects of trade liberalisation related to investment and productivity improvements due to competition or increased intra‐industry trade could not be accounted for.

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Section: Resultsmentioning

confidence: 99%

Section: Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Can the Regional Comprehensive Economic Partnership minimise the harm from the United States–China trade war?

Mahadevan

Nugroho

2019

World Economy

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“…absence of domestic policies or more unrealistic treatment of production and demand functions), see Bekkers (2017). Given the lack of a superior alternative for trade policy analysis as pointed out by Nilsson (2018), we believe that the model still produces useful insights and is an appropriate tool in the context of our study.…”

Section: Methodsmentioning

confidence: 98%

The role of coalitions at international tariff negotiations: a CGE perspective

Freund

2021

Rev World Econ

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Developing countries coalitions form an integral part of tariff negotiations that take place under the aegis of the World Trade Organization. While there was only a single coalition in the 70s, their number increased to 31 in the year 2005. Despite the apparent proliferation of coalitions in tariff negotiations, little research on their theoretical and empirical implications has been produced. In particular, we lack an understanding of efficiency and equity effects of coalitions. By exploring this equity-efficiency nexus, the study finds that developing countries coalitions like the G-90 and the Least Developed Countries Group – while benefiting member countries – lead to less efficiency and less equity overall. Forming the Cairns Group, however, leads to a more efficient and equal distribution of the gains from trade.

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“…CGE models usually perform agent's optimizations in a deterministic fashion, but dynamic stochastic variants of these models can be used instead to enable random shocks and simulate business cycles and cyclical effects more realistically [33,34]. The main critique on these models is based on their complex structure and dependence on the elasticity parameters used [27,35]. Econometric models estimate the relations between the variables of interest in a statistical fashion using historical data.…”

Section: Modeling Approachesmentioning

confidence: 99%

What Is the Macroeconomic Impact of Higher Decarbonization Speeds? The Case of Greece

Spiliotis

Doukas

2021

Energies

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In alignment with the European Union’s legislation, Greece submitted its final 10-year National Energy and Climate Plan (NECP) in December 2019, setting more ambitious energy and climate targets than those originally proposed in the draft version of the document. Apart from higher penetration of renewable energy sources (RES), the final NECP projects also zero carbon use in power generation till 2030. Although decarbonization has long been regarded beneficial for economies that base their energy production on coal, as it is the case with Greece, the macroeconomic and societal ramifications of faster transitions to carbon-free economies remain highly unexplored. Under this context, in this paper, we soft-link energy models, namely Times-Greece and Primes, with a macroeconomic model, namely Global Trade Analysis Project (GTAP), to measure the effects of the final and draft NECPs on the Greek economy and evaluate the impact of higher decarbonization speeds. We find that the faster transition scenario displays both economic and societal merits, increasing Gross Domestic Product (GDP) and household income by about 1% and 7%, respectively.

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Reflections on the Economic Modelling of Free Trade Agreements

Cited by 15 publications

References 32 publications

Can the Regional Comprehensive Economic Partnership minimise the harm from the United States–China trade war?

Can the Regional Comprehensive Economic Partnership minimise the harm from the United States–China trade war?

The role of coalitions at international tariff negotiations: a CGE perspective

What Is the Macroeconomic Impact of Higher Decarbonization Speeds? The Case of Greece

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