Resource Center

Advanced Search
Technical Papers
Working Papers
Research Memoranda
GTAP-L Mailing List
CGE Books/Articles
Important References
Submit New Resource

GTAP Resources: Resource Display

GTAP Resource #5503

"Converting GTAP from Armington to Melitz: giving Melitz sectors to GTAP"
by Dixon, Peter, Michael Jerie and Maureen Rimmer

This paper consists of excerpts from Chapter 7 in our book titled Trade Theory in Computable General Equilibrium Models: Armington, Krugman and Melitz, published by Springer in April 2018. Readers who want the whole story and the GEMPACK code for our models should go to the book.

Abstract This chapter describes how to convert an existing Armington CGE model into a Melitz CGE model with minimal changes to the original Armington model. The main task is to add equations to the bottom of the Armington model to form what we call an Armington-to-Melitz or A2M system. With an A2M system, industries can be switched between Armington and Melitz treatments by closure swaps. We use BasicArmington (a simple Armington model) to explain how to create an A2M system. Then we apply the method to a 10-region, 57-commodity version of the frequently applied policy-oriented GTAP model to create a GTAP-A2M system. Using this system, we compare the effects under Armington and Melitz assumptions of a tariff imposed by North America on imports of wearing apparel (Wap). To facilitate the comparison, we decompose the welfare effects for each region into parts attributable to changes in employment, terms of trade and scale-related efficiency. This helps us to understand how each of these factors operates under Armington and Melitz, but it does not give us an intuitive explanation of their net outcome. To explain net outcomes for welfare effects by region we set out an intuitive overarching theory. We check its validity by back-of-the-envelope (BOTE) calculations using GTAP data items and selected simulation results. BOTE calculations enable us to cut through the maze of complications in CGE models to locate, for any specific result, the essential underlying ingredients.

Resource Details (Export Citation) GTAP Keywords
Category: 2018 Conference Paper
Status: Published
By/In: Springer Book; Presented at the 21st Annual Conference on Global Economic Analysis, Cartagena, Colombia
Date: 2018
Created: Dixon, P. (4/13/2018)
Updated: Dixon, P. (4/13/2018)
Visits: 2,352
- Calibration and parameter estimation
- Model validation and sensitivity analysis
- Software and modeling tools
- Technological change
- Trade in textiles and wearing apparel
- The GTAP Data Base and extensions
- Asia (Southeast)
- North America

If you have trouble accessing any of the attachments below due to disability, please contact the authors listed above.

Public Access
  File format GTAP Resource 5503  (238.4 KB)   Replicated: 0 time(s)

Restricted Access
No documents have been attached.

Special Instructions
No instructions have been specified.

Comments (0 posted)
You must log in before entering comments.

No comments have been posted.