Trade Theory In Computable General Equilibrium Models: Armington, Krugman And Melitz by Peter B. DixonTrade Theory In Computable General Equilibrium Models: Armington, Krugman And Melitz by Peter B. Dixon

Trade Theory In Computable General Equilibrium Models: Armington, Krugman And Melitz

byPeter B. Dixon, Michael Jerie, Maureen T. Rimmer

Hardcover | April 11, 2018

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This book is for people who want to understand modern trade theory, particularly the Melitz model. It lays out Melitz theory from first principles and relates it to earlier theories of Armington and Krugman. For trade theory specialists, the book produces some significant conclusions. It identifies conditions under which Krugman and Melitz models produce essentially the same results for the welfare effects of trade liberalization as those obtained from Armington, and conditions under which this is not true. These findings will be of interest to academics and policy advisors who need to understand critiques of Armington by proponents of Krugman and Melitz.

For computable general equilibrium (CGE) modelers, the book shows how Melitz-style CGE models can be calibrated, solved and interpreted. A major practical contribution of the book is to show how large-scale Armington models such as GTAP can be converted to Melitz by the addition of a small number of equations and minimal alteration of the original Armington model.

The book describes computational experience in solving Melitz CGE models using GEMPACK software. This experience will be of interest to researchers currently attempting to solve Melitz-based CGE models. Almost all previous Melitz studies have used GAMS software. Authors of these studies have reported computational difficulties. These difficulties did not occur in this book's GEMPACK-based computations.

The book concludes that: (a) CGE modelers can embrace Melitz while retaining their Armington-based models as powerful interpretive devices; and (b) via GEMPACK, large-scale CGE models incorporating Melitz specifications can be solved with no more difficulty than similar-dimensioned Armington models.

Peter Dixon is Professor at the Centre of Policy Studies, Victoria University, Australia, and is known internationally for his work in CGE modeling. Together with colleagues at the IMPACT Project and CoPS, he created the ORANI model and its dynamic successor, MONASH. These models have been prominent in the Australian economic debate fo...
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Title:Trade Theory In Computable General Equilibrium Models: Armington, Krugman And MelitzFormat:HardcoverDimensions:189 pagesPublished:April 11, 2018Publisher:Springer NatureLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:9811083231

ISBN - 13:9789811083235

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Table of Contents

Chapter 1. Introduction: What's in the Book and How to Read It.- Chapter 2. Armington, Krugman and Melitz as Special Cases of an Encompassing Model.- Chapter 3. Optimality in the Armington, Krugman and Melitz Models.- Chapter 4. Calibration and Parameter Estimation for a Melitz Sector in a CGE Model.- Chapter 5. Melitz equals Armington Plus Endogenous Productivity and Preferences.- Chapter 6. Illustrative GEMPACK Computations in a General Equilibrium Model with Melitz Sectors.- Chapter 7. Converting an Armington Model into a Melitz Model: Giving Melitz Sectors to GTAP.- Chapter 8. Summary and Concluding Remarks.