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GTAP Resource #5709

"Armington elasticities in CGE models: a sensitivity analysis"
by Kutlina-Dimitrova, Zornitsa and Alessandro Antimiani

The importance of Armington elasticities for computable general equilibrium (CGE) modelling of trade policy initiatives is indisputable among economists and applied trade policy analysts. The Armington structure of a model lies in the core of translating the impact of trade policy changes via taxes, tariffs or any other trade cost into quantitative responses coming out of the CGE such as output, trade flows, welfare and other variables.

Against this background, the current paper aims at filling in the gap on the importance of Armington elasticities for trade policy simulations. We use the latest dynamic version of the GTAP model and develop scenarios under which to explore the behaviour of key economic variables under varying Armington elasticities. Furthermore, the paper takes into account evidence from the econometric literature which shows that: (i) short-run Armington elasticities are significantly lower compared to long-run estimates, (ii) Armington elasticities are the larger the higher the level of product disaggregation, and (iii) cross-sectional estimations deliver higher Armington then time-series approaches.

Resource Details (Export Citation) GTAP Keywords
Category: 2019 Conference Paper
Status: Published
By/In: Presented at the 22nd Annual Conference on Global Economic Analysis, Warsaw, Poland
Date: 2019
Created: Kutlina-Dimitrova, Z. (4/8/2019)
Updated: Batta, G. (4/14/2019)
Visits: 1,810
- Dynamic modeling
- Model validation and sensitivity analysis
- European Union

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