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    Olekseyuk, Zoryana and Balistreri, Edward J. 2018. Trade liberalization gains under different trade theories: a case study for Ukraine. Empirica, Vol. 45, Issue. 3, p. 507.

    Balistreri, Edward J. Böhringer, Christoph and Rutherford, Thomas F. 2018. Carbon policy and the structure of global trade. The World Economy, Vol. 41, Issue. 1, p. 194.

    Hoekman, Bernard and Nelson, Douglas R 2018. Reflecting on populism and the economics of globalization. Journal of International Business Policy, Vol. 1, Issue. 1-2, p. 34.

    Kehoe, Timothy J. Pujolàs, Pau S. and Rossbach, Jack 2017. Quantitative Trade Models: Developments and Challenges. Annual Review of Economics, Vol. 9, Issue. 1, p. 295.

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    Carbone, Jared C. and Rivers, Nicholas 2017. The Impacts of Unilateral Climate Policy on Competitiveness: Evidence From Computable General Equilibrium Models. Review of Environmental Economics and Policy, Vol. 11, Issue. 1, p. 24.

    Mahadevan, Renuka Amir, Hidayat and Nugroho, Anda 2017. How Pro-Poor and Income Equitable Are Tourism Taxation Policies in a Developing Country? Evidence from a Computable General Equilibrium Model. Journal of Travel Research, Vol. 56, Issue. 3, p. 334.

    Breinlich, Holger and Cuñat, Alejandro 2016. Tariffs, Trade and Productivity: A Quantitative Evaluation of Heterogeneous Firm Models. The Economic Journal, Vol. 126, Issue. 595, p. 1660.

    Polo, Clemente and Viejo, Raimundo 2015. ON THE ACCURACY OF CGE FORECASTS IN EXPANSION AND RECESSION: SPAIN 1990–1997. Economic Systems Research, Vol. 27, Issue. 4, p. 525.

    DIXON, PETER B. and RIMMER, MAUREEN T. 2010. Validating a Detailed, Dynamic CGE Model of the USA*. Economic Record, Vol. 86, Issue. , p. 22.

    Zhai, Fan 2009. From Growth to Convergence. p. 150.

  • Print publication year: 2005
  • Online publication date: January 2010

13 - An Evaluation of the Performance of Applied General Equilibrium Models on the Impact of NAFTA


ABSTRACT: This paper evaluates the performance of three of the most prominent multisectoral static applied general equilibrium (GE) models used to predict the impact of the North American Free Trade Agreement (NAFTA). These models drastically underestimated the impact of NAFTA on North American trade. Furthermore, the models failed to capture much of the relative impact on different sectors. Ex post performance evaluations of applied GE models are essential if policymakers are to have confidence in the results produced by these models. Such evaluations also help make applied GE analysis a scientific discipline in which there are well-defined puzzles with clear successes and failures for competing theories. Analyzing sectoral trade data indicates the need for a new theoretical mechanism that generates large increases in trade in product categories with little or no previous trade. To capture changes in macroeconomic aggregates, the models need to be able to capture changes inproductivity.


Herbert Scarf's work on the computation of economic equilibrium has transformed the way economists think about putting general equilibrium (GE) theory to use. Previous economists – notably Leontief (1941), Johansen (1960), and Harberger (1962) – had matched simple GE models to data and used these models to answer important economic questions. Scarf's work (1967, 1973) on computation forged the link between applied GE analysis and the theory of general economic equilibrium developed by researchers such as Arrow and Debreu (1954) and McKenzie (1959).

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Frontiers in Applied General Equilibrium Modeling
  • Online ISBN: 9780511614330
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