Kenneth A. Reinert

Applied methods for trade policy analysis : a handbook

List of tables List of figures Acknowledgements List of contributors A note to readers Part I. Introduction: 1. Applied methods for trade policy analysis: an overview Joseph F. Francois and Kenneth A. Reinert Part II. Basic Frameworks: 2. Quantifying commercial policies Samuel Laird 3. Measuring welfare changes with distortions William J. Martin 4. Social accounting matrices Kenneth A. Reinert and David W. Roland-Holst 5. Partial equilibrium modeling Joseph F. Francois and H. Keith Hall 6. Simple general equilibrium modeling Shantayanan Devarajan, Delfin S. Go, Jeffrey D. Lewis, Sherman Robinson and Pekka Sinko Part III. Standard Applications: 7. Sector-focused general equilibrium modeling Bruce A. Blonigen, Joseph E. Flynn and Kenneth A. Reinert 8. Multi-market, multi-region partial equilibrium modeling Vernon O. Roningen 9. Multi-region general equilibrium modeling Thomas W. Hertel, Elena Ianchovichina and Bradley J. McDonald 10. Household disaggregation Farida C. Khan Part IV. Extensions: 11. Scale economies and imperfect competition Joseph F. Francois and David W. Roland-Holst 12. Capital accumulation in applied trade models Joseph F. Francois, Bradley J. McDonald and Hakan Nordstrom 13. Dynamics of trade liberalization Christian Keuschnigg and Wilhelm Kohler 14. Trade and labour market behaviour Karen E. Thierfelder and Clinton R. Shiells 15. Labour market structure and conduct Andrea M. Maechler and David W. Roland-Holst 16. Trade and the environment Hiro Lee and David W. Roland-Holst Author index Subject index.

Applied Methods for Trade Policy Analysis: Social Accounting Matrices

Introduction The theory of international trade is a general equilibrium affair: offer curves, Edgeworth–Bowley box diagrams, and Travis boxes are frequently used tools. For a long time, however, applied trade policy analysis was restricted to partial equilibrium techniques. This was primarily due to constraints on data and computation for general equilibrium calibration and simulation. Nonlinear simulation software is now readily available, and general equilibrium techniques are often applied to trade policy problems. Surveys of these applications can be found in Shoven and Whalley (1984) and de Melo (1988). Computable general equilibrium (CGE) models are calibrated to what are known as benchmark equilibrium datasets. The calibration process computes intercept and share parameters for the models mathematical functions, given assumed or estimated values of behavioral elasticities, to reproduce the observed data as an equilibrium solution of the model. While much attention is devoted to the assumed or estimated behavioral elasticities, the calibrated intercept and share parameters are at least as important. Regardless of the quality of elasticity estimates, comparative static results have little empirical significance if they are not evaluated with respect to observed economic conditions. A consistent and convenient means of compiling a benchmark equilibrium dataset is the social accounting matrix (SAM). This data framework has been extensively applied to developing countries under promotion by the World Bank and has been more recently applied to developed countries. A SAM for 1984 underlies the CGE model of the United States developed by de Melo and Tarr (1992). The CGE model in use at the U.S. International Trade Commission is currently based on a SAM updated biannually (Reinert and Roland-Hoist, 1991).

Armington Models and Terms-of-Trade Effects: Some Econometric Evidence for North America

Elasticities of substitution among U.S. imports from Mexico, Canada, the rest of the world, and competing domestic production are estimated for twenty-two mining and manufacturing sectors, based on quarterly data for 1980-88. These elasticities will provide a benchmark for computable general equilibrium models of North American trade liberalization. The authors also find that estimated Armington elasticities are low and, therefore, researchers may want to reconsider the device of using high values of Armington elasticities in multicountry computable general equilibrium models to avoid large terms-of-trade losses associated with preferential trade liberalization.

Globalization for Development : Trade, Finance, Aid, Migration, and Policy

Globalization and its relation to poverty reduction and development are not well understood. The book identifies the ways in which globalization can overcome poverty or make it worse. The book defines the big historical trends, identifies main global flows-trade, finance, aid, migration, and ideas-and examines how each can contribute to undermine economic development. By considering what helps and what does not, the book presents policy recommendations to make globalization more effective as a vehicle for shared growth and prosperity.

A Detailed Social Accounting Matrix for the USA, 1988

This paper presents the methodology used to construct a highly disaggregated social accounting matrix (SAM) of the USA which integrates data on interindustry flows, value added, imports and final demand for 487 production sectors into a consistent framework. The table was assembled from a variety of government data sources and updates 1982 input–output accounts and other information to 1988. The paper documents the data and techniques used to assemble and update these accounts for those who wish to construct large-scale SAMs.

Commercial Policy and the Domestic Carrying Trade

In this paper, the authors examine the economic consequences of existing U.S. restrictions on trade in domestic water transportation (cabotage) services. They briefly trace the history of U.S. policy on cabotage. The authors also use an applied general equilibrium model of the United States to analyze the effects of the Jones Act on welfare and on production, trade, and employment in important upstream and downstream sectors. The economic effects of U.S. maritime policies rank them with U.S. trade policies like the MFA, the automobile and steel quotas of the mid-1980s, and agricultural import restraints. Coauthors are Hugh M. Arce, Kenneth A. Reinert, and Joseph E. Flynn.

Social Accounts and the Structure of the North American Economy

This paper presents the methodology for and results of the construction of a 26-sector social accounting matrix (SAM) for North America. We begin with the construction of three macro-economic SAMs and their integration into a North American macro-economic SAM. We then turn to the construction of a sectorally detailed SAM for the continent. Finally, we consider the structure of North American receipts and payments and the regional decomposition of multipliers.

No Small Hope: The Basic Goods Imperative

Abstract This paper argues in favor of a basic goods approach to outcomes assessment in development policy analysis. It contrasts the basic goods approach with the utility-of-consumption and capabilities approaches and argues, on a number of grounds, that it is a more relevant and appropriate framework. The dimensions of the basic goods approach analyzed include a common, minimalist character, sense of justice, subjectivist-objectivist considerations, the human condition, relationship to policy space, and the theoretical and empirical role of basic needs. Taken as a whole, these perspectives suggest that the basic goods approach offers key advantages not found in the two relevant alternatives.

Industrial Pollution Linkages in North America: A Linear Analysis

In recent years, a surge of interest in the linkages between trade and the environment has occurred in the contexts of both regional and multilateral trade agreements. In this paper, we utilize a three-country, social accounting matrix (SAM) of the North American economy and data from the World Banks Industrial Pollution Projection System (IPPS) to conduct a linear multiplier analysis of industrial pollution linkages in North America. We provide estimates of both direct and indirect inter-country effects for a detailed set of industrial pollutants. The strongest linkages occur in the petroleum, chemicals, paper, base metals, and transportation equipment sectors.

Standards and Institutional Capacity: An Examination of Trade in Food and Agricultural Products

The ability of developing countries to cope with emerging standards in food and agricultural products is influenced by their institutional capacity. This paper develops original measures of four dimensions of standards-related, institutional capacity: information, conformity, enforcement, and international standard-setting. These measures are incorporated into a gravity model to investigate whether these capacities offset the negative effects of Aflatoxin B1 standards on food and agricultural product trade. The results indicate that informational capacity and conformity capacity do indeed have such offsetting effects. The evidence with regard to enforcement and international standard-setting is less clear.