Modeling Trade Policy: Applied General Equilibrium Assessments of North American Free Trade
Joseph F. Francois, Clinton R. Shiells
Cambridge University Press, Dec 11, 2008 - Business & Economics - 372 pages
Applied general equilibrium (AGE) models have received considerable attention and scrutiny in the public debate over the North American Free Trade Agreement (NAFTA). This collection brings together the leading AGE models that have been constructed to analyze NAFTA. A variety of approaches to modeling trade liberalization are taken in these studies, including multi-country and multi-sectoral models, models that focus on institutional features of particular sectors (agricultural, autos, steel, textiles and apparel) affecting multinational firms and rules of origin, and models with some inter-temporal structure. Further, by constructing stylized models, theoretical linkages have been identified that drive numerical results in the larger AGE models. The volume also assesses what can be learned about the likely economic effects of NAFTA from the collection of studies taken as a whole. Areas in need of further study have been highlighted.
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adjustment AGE models aggregate agriculture American free trade applied general equilibrium assumed auto benchmark beneﬁts bilateral CAFTA calibrated Canada Canadian capital ﬂows changes Cobb-Douglas commodity competition composite computable general equilibrium consumption deﬁned domestic economy effects elasticity of substitution employment engines equation equilibrium model estimates exchange rate exports ﬁnal ﬁnd ﬁnns ﬁrst ﬁxed foreign ﬁrms free trade agreement govemment growth impact imperfect competition imports income increase industry inputs intemational investment labor market maize marginal cost Mexican Mexico migration monopolistic competition NAFTA North American free output parameters percent product differentiation production proﬁts quotas rain-fed land reﬂect region Reinert relative prices retums Roland-Holst rural labor scale scenario sector Shiells signiﬁcant speciﬁcation steel Stolper-Samuelson Stolper-Samuelson theorem structure supply Table tariff textile and apparel tortillas trade balance trade diversion trade liberalization trade policy U.S.-Mexico United urban unskilled value added welfare Wijnbergen workers world prices