NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Quantitative Trade Models: Developments and Challenges

Timothy J. Kehoe, Pau S. Pujolas, Jack Rossbach

NBER Working Paper No. 22706
Issued in September 2016, Revised in May 2017
NBER Program(s):Economic Fluctuations and Growth, International Trade and Investment

Applied general equilibrium (AGE) models, which feature multiple countries, multiple industries, and input-output linkages across industries, have been the dominant tool for evaluating the impact of trade reforms since the 1980s. We review how these models are used to perform policy analysis and document their shortcomings in predicting the industry-level effects of past trade reforms. We argue that, to improve their performance, AGE models need to incorporate product-level data on bilateral trade relations by industry and better model how trade reforms lower bilateral trade costs. We use the least traded products methodology of Kehoe et al. (2015) to provide guidance on how improvements can be made. We provide further suggestions on how AGE models can incorporate recent advances in quantitative trade theory to improve their predictive ability and better quantify the gains from trade liberalization.

download in pdf format
   (386 K)

email paper

Supplementary materials for this paper:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w22706

Published: Timothy J. Kehoe & Pau S. Pujolàs & Jack Rossbach, 2017. "Quantitative Trade Models: Developments and Challenges," Annual Review of Economics, vol 9(1), pages 295-325. citation courtesy of

Users who downloaded this paper also downloaded* these:
Redding and Rossi-Hansberg w22655 Quantitative Spatial Economics
Cherniwchan, Copeland, and Taylor w22636 Trade and the Environment: New Methods, Measurements, and Results
Bernard, Jensen, Redding, and Schott w22727 Global Firms
DeAngelo, Gonçalves, and Stulz w22828 Corporate Deleveraging
Antràs, de Gortari Briseno, and Itskhoki w22676 Globalization, Inequality and Welfare
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us