Journal article
How reasonable are assumptions used in theoretical models? Computational evidence on the likelihood of trade pattern changes
The Canadian journal of economics, Vol.39(3), pp.781-789
08/2006
DOI: 10.1111/j.1540-5982.2006.00369.x
Abstract
In theoretical literature it is common to make the assumption that in a multi-country, multi-good world, the direction of trade (import and export by commodity) is predetermined and fixed for each good for each country. We consider a simple three-country, three-good, pure-exchange model with CES preferences. We compute free trade competitive equilibria, three-country non-cooperative Nash equilibria, and customs union equilibria for randomised parameterizations, and find that trade pattern changes between free trade and customs union equilibria in around 35% of cases.
Details
- Title: Subtitle
- How reasonable are assumptions used in theoretical models? Computational evidence on the likelihood of trade pattern changes
- Creators
- Lisandro Abrego - International Monetary FundRaymond Riezman - University of IowaJohn Whalley - Western University
- Resource Type
- Journal article
- Publication Details
- The Canadian journal of economics, Vol.39(3), pp.781-789
- DOI
- 10.1111/j.1540-5982.2006.00369.x
- ISSN
- 0008-4085
- eISSN
- 1540-5982
- Publisher
- Blackwell Publishing Inc
- Number of pages
- 9
- Language
- English
- Date published
- 08/2006
- Academic Unit
- Economics
- Record Identifier
- 9984963111202771
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